As a seasoned researcher with over a decade of experience in analyzing financial markets, I find myself intrigued by the current state of Bitcoin (BTC). The recent consolidation around $91,000 has been captivating, to say the least. While derivatives suggest that professional traders remain confident in the bull market, it’s essential to delve deeper into the factors driving this momentum.
Bitcoin (BTC) has been confined to a 7% price band around $91,000 since November 12, suggesting a phase of consolidation. However, derivative markets show that expert traders continue to be optimistic about the bull market. Moreover, numerous attempts to surpass the $92,000 mark indicate robust buying interest that outweighs the significant Bitcoin purchases by MicroStrategy.
In simpler terms, the difference between buying and selling Bitcoin options has reached its smallest gap in four months, suggesting that investors are expecting a lower cost for protection against potential price drops (put options). When this delta skew falls below -6%, it usually signals a bullish outlook, as it indicates faith in the $87,000 price level as a strong support. This optimism is particularly noticeable among large Bitcoin investors (whales) and those who make profits from arbitrage opportunities.
Although this data seems hopeful, it doesn’t necessarily mean investors are certain that the bull market will persist indefinitely. It’s essential to scrutinize the underlying factors fueling the current uptrend. For instance, if analysts believe MicroStrategy is the main force behind Bitcoin’s record-breaking high, we should see related indicators in Bitcoin futures and margin markets.
Is MicroStrategy the sole driver behind Bitcoin’s bull run?
The idea that certain entities might be behind the Bitcoin purchases exceeding $87,000 grew stronger when MicroStrategy announced on Nov. 18 that they had bought an additional 51,780 Bitcoins. This information, disclosed in a SEC filing, shows that MicroStrategy now possesses more than $29 billion worth of Bitcoin and is aiming to raise another $21 billion by selling MSTR shares.
Instead of it, we can say that compared to some investors’ expectations, Bitcoin might not experience further price growth as anticipated, given the current trend in exchange-traded fund (ETF) outflows. This is because the latest data from November 14 and 15 indicates a withdrawal of $771 million, suggesting that investors are choosing to cash out following the recent market rally rather than increasing their exposure, such as pension funds or large hedge fund managers.
To get a sense of how experienced traders feel about Bitcoin, it’s crucial to examine both the Bitcoin futures market and the margin trading market. For instance, a consistent interest in leveraged BTC futures usually means traders are optimistic, while more frequent use of price hedging may indicate that large investors and arbitrage groups are uncertain about the current Bitcoin price trend.
On November 18th, the premium for Bitcoin’s 2-month futures contract skyrocketed to 17%, significantly surpassing the usual range of 5% to 10%. This high level of enthusiasm hasn’t been seen since late March, about eight months ago. During that time, Bitcoin managed to maintain its position above $64,000 despite facing two weeks of bearish pressure.
To better understand the attitudes of Bitcoin traders, it’s crucial to scrutinize the margin trading market. Unlike traditional derivative contracts that necessitate both a buyer and a seller, the margin market allows traders to obtain stablecoins as loans to purchase spot Bitcoin instantly. Conversely, pessimistic traders can borrow Bitcoin themselves to establish short positions, wagering on a potential price drop.
As a researcher, I’m observing that the Bitcoin long-to-short margin ratio at OKX stands at approximately 14 times, indicating a strong bias towards long positions (buyers). Historically, when this indicator exceeds 40 times, it has often signaled excessive confidence, which can lead to market reversals. Conversely, ratios below 5 times, favoring long positions, are typically seen as bearish indicators.
In essence, Bitcoin derivative and margin markets indicate robust optimism, even when considering the buy-side activities primarily driven by MicroStrategy. The recent retest of the $88,700 level on November 17 had minimal effect, indicating that investors are unlikely to sell off immediately during minor market downturns.
This post serves primarily for informational purposes and does not constitute nor replace professional legal or financial guidance. The perspectives, ideas, and opinions shared in this article belong solely to the author and may not align with those held by CryptoMoon.
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2024-11-18 23:18