As a seasoned researcher with over two decades of experience in the ever-evolving world of finance and technology, I find myself intrigued by the latest surge in Bitcoin (BTC) prices, which has propelled it above $93,000 for the first time. While some traders believe that this bullish momentum could weaken due to profit-taking activities among miners, my analytical lens suggests a more robust rally ahead.
Between November 11 and November 13, Bitcoin (BTC) experienced a significant increase of approximately 16%, reaching an unprecedented level of $93,000 for the first time. However, even with this new all-time high, some market participants predict that the bullish trend may lose steam as traders, including certain Bitcoin miners, might choose to cash out their gains.
According to Julio Moreno, who leads the research team at CryptoQuant, it was observed that certain Bitcoin miners started cashing out on November 12th. However, this activity fell within typical ranges when looking at larger entities (holding 100 Bitcoins or more) closely.
Nevertheless, four crucial indicators point towards Bitcoin’s rally continuing to be strong. These consist of insights from derivatives and the U.S. dollar’s forecast.
When U.S. Treasury yields increase, it means investors are asking for higher payments (returns) on their fixed-income investments. This suggests that investors expect either a rise in inflation or an expansion of government spending, both of which can lower the worth of Treasury holdings. In essence, the rise in yields indicates a decrease in confidence about the U.S. financial situation.
Some financial experts argue that the current surge in the value of the U.S. dollar compared to other significant currencies like the Euro, Yen, and Swiss Franc might initially influence Bitcoin’s cost adversely. Yet, this negative correlation seems less crucial now.
As a crypto investor, I’ve found myself increasingly convinced that Bitcoin holds its ground as a unique form of wealth storage following the debut of a $54 billion spot Bitcoin ETF. This development underscores Bitcoin’s growing recognition and acceptance in traditional financial markets.
In simpler terms, when the U.S. dollar is stronger compared to other world currencies, it tends to have a direct impact on the performance of stock markets. However, this relationship between stock market performance and Bitcoin’s price is quite loose. This pattern arises because investors often perceive the U.S. economy as being in a better state than other major economies, which leads them to expect strong corporate earnings. In essence, a robust U.S. economy can influence both the stock market and Bitcoin’s price, but these connections are not tight or consistent.
Bitcoin derivatives hint at further bullish momentum
The Bitcoin futures premium, which measures the difference between monthly derivatives prices and regular spot markets, serves as an important indicator when traders are overly optimistic. In neutral markets, a 5% to 10% annualized premium is expected to compensate for the longer settlement period. The current 13% premium indicates that whales and arbitrage desks are moderately excited, a healthy sign given Bitcoin’s all-time high on Nov. 13.
As a crypto investor, I’ve noticed that when experienced traders sense an impending Bitcoin price adjustment, the premium for protective put options increases, pushing the skew indicator beyond 6%. Conversely, excessive optimism can cause the Bitcoin skew to dip below -6%. However, despite a remarkable 16% surge in BTC over just two and a half days, current options data suggests a balanced market atmosphere.
If U.S. Treasury yields don’t significantly drop, investors will likely keep chasing hard-to-find assets like Bitcoin, implying that the overall economic situation remains advantageous. Even though the new Trump administration has suggested reducing government spending, immediate action is limited because most changes need Congressional approval first.
Looking ahead, it seems likely that Bitcoin’s price will continue to rise, boosted by a pro-cryptocurrency U.S. administration and a Republican majority in Congress. Additionally, a positive or even bullish outlook in Bitcoin derivatives markets adds to this optimism. Factors like Senator Cynthia Lummis’s plan to potentially increase the US Treasury’s Bitcoin holdings could drive the price of Bitcoin well over $100,000.
This piece is intended to provide you with a broad understanding, but it’s essential to note that it doesn’t constitute legal or investment advice. The ideas shared here belong solely to the author and may not align with the views and opinions of CryptoMoon.
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2024-11-13 22:04