As an experienced analyst with over a decade in the financial markets under my belt, I’ve seen bull and bear cycles come and go. The current Bitcoin (BTC) price momentum might have cooled, but the derivatives market’s optimism remains palpable.
The upward push in Bitcoin’s (BTC) price has slowed down following its October 29 surge towards the record high, yet the derivatives market remains bullish, hinting at investors’ expectation for a future price increase.
The examination of Bitcoin futures and option contracts indicates that traders are holding their positions with reasonable levels of debt, which is significant for a steady climb towards fresh record highs. Yet, determining the cause behind Bitcoin’s price fall below $69,000 on November 1st still holds great importance.
As a researcher studying Bitcoin prices, I’ve noticed an intriguing pattern: When there’s a heightened anticipation of a Bitcoin price drop, the 25% delta skew metric often surpasses 7%. This trend suggests that put options (options to sell Bitcoin) are overpriced because demand for them is higher.
Bitcoin derivatives look stable despite the BTC price pullback
To determine if Bitcoin traders’ confidence has lessened following the recent market dip, it can be helpful to examine the rate of perpetual contracts (similar to inverse swaps). When this rate is around zero (neutral), it implies a lack of firm conviction, while rates above 2.1% per month may indicate overly optimistic expectations.
On November 1st, the leverage demand remained relatively stable, with a rate of 0.01% being set every 8 hours, which equates to around 0.9% over an entire month. This is typically considered a neutral position.
As a researcher examining the recent surge in Bitcoin’s value, I find no clear evidence that leverage was the main factor driving its price increase from $67,000 to $73,500 between October 27th and 29th. Instead, this trend appears to reflect a robust and healthy market movement. Delving deeper into the Bitcoin derivatives markets, it’s evident that they are sustaining a prolonged bull market, which could pave the way for even more significant gains in the future.
Multiple factors impact investor sentiment
Viewed through a trading lens, it seems that locking in profits prior to Bitcoin’s surge back up to $71,000 on November 1 may share a strong link with fluctuations in the S&P 500 index. This could imply that both markets are responding to similar broader economic signals.
In periods when economic downturn seems imminent, many traders opt for safer investments like cash reserves or U.S. Treasury bills. This trend can help us understand why the stock market and even digital currencies such as Bitcoin have been falling lately. The decline follows Intel’s announcement of a 6% decrease in quarterly revenue compared to the previous year.
Lately, technology titans such as Microsoft and Meta have disclosed an uptick in AI spending, which has led to reduced anticipation for profit growth. This development follows a 44% drop in Super Micro Computer (SMCI) shares over three days due to the surprise departure of EY as their auditor. (Paraphrased)
On November 1st, there was a slight change in the overall sentiment in the market after the U.S. Bureau of Labor Statistics revealed that only 12,000 jobs were added to payrolls in October, which was lower than the expected 100,000.
Moreover, U.S. salaries increased by 0.4% compared to the last month, causing concerns about inflation. However, financial experts using the CME FedWatch tool predict a 0.25% reduction in interest rates by the U.S. Federal Reserve on November 7th instead.
As a crypto investor, I find it prudent to keep a close eye on significant events such as the upcoming U.S. presidential elections and the Federal Open Market Committee (FOMC) decision. Historically, economic stimulus efforts by the government can weaken the value of the U.S. dollar. If this trend continues, it might potentially elevate the price of Bitcoin in the long term.
This piece is meant to provide you with a broad understanding and isn’t intended to function as legal or financial guidance. Any perspectives, ideas, or opinions shared are solely those of the writer and may not align with the views or opinions of CryptoMoon.
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2024-11-03 06:28