Bitcoin price rallies on halving day, but what do futures markets show?

On the morning of April 19, Bitcoin (BTC) experienced a significant decrease of approximately 6%, reaching a bottom at $59,640. However, it soon bounced back and managed to maintain its value above the crucial level of $64,500.

The Bitcoin rebound can be attributed to the anticipation surrounding the upcoming halving on April 20, an event that historically generates substantial attention from mainstream news outlets and Bitcoin ETF providers. This positive development seems to have mitigated some of the negative effects of larger socio-economic issues.

In the present chaos, the geopolitical situation contributes to the market’s unpredictability. The price of Bitcoin appears to follow global events, particularly the escalating tensions in the Middle East. However, a sense of relief was felt in the markets after Iranian officials announced they had no intention of retaliating, calming investor anxieties.

Low liquidations during extreme volatility strengthen the $60,000 support

On the significant price change of Bitcoin, worth approximately $5,850 on the 19th of April, the liquidations in Bitcoin futures remained quite limited, with an approximate total of $45 million as indicated by Coinglass data. This implies that traders had not heavily used leverage, a positive indication since the $60,000 mark has emerged as a psychologically significant level of support.

According to Amina Bank’s cryptocurrency experts, geopolitical conflicts aren’t the only factors influencing market mood. Their study indicates that trading activity, ETF investments, and US inflation news hold significant weight as well. Moreover, these analysts mentioned that miners are offloading their Bitcoin in preparation for the upcoming halving event, aiming to cash in on their earnings before the reward size diminishes.

Economically speaking, the robust U.S. inflation figures and solid labor market have boosted retail sales by 0.7% year-on-year. Consequently, this economic stability has decreased the likelihood that the Federal Reserve will lower interest rates in the upcoming months. This hesitance is mirrored in the S&P 500 index dropping by 5% since reaching its peak of 5,265 on March 28th.

Bitcoin halving proximity caused no relevant changes in BTC futures metrics

Looking at the bird’s eye perspective of Bitcoin derivatives markets provides a useful vantage point to assess if the Bitcoin halving has led to substantial wagers. Based on data from BTC futures, the present open interest amounts to $29.8 billion, which is not much higher than the $28.6 billion recorded just two days ago. This minor uptick implies that the Bitcoin halving has yet to trigger a substantial surge in demand for leverage.

Bitcoin price rallies on halving day, but what do futures markets show?

Over a longer period, the need for Bitcoin futures contracts has seemed more modest than the past week’s record-breaking $35.5 billion. This suggests that the Bitcoin halving anticipation alone hasn’t sparked an excessive surge in demand.

After a significant price move in Bitcoin (BTC), it can be helpful to decipher the positions of experienced traders by examining the BTC futures premium. Generally, this indicator hovers around a 5%-10% annualized premium over spot markets. This premium signifies that sellers are asking for extra funds to delay the settlement process.

Bitcoin price rallies on halving day, but what do futures markets show?

The cost to buy a BTC futures contract valid for three months is now at 11%, signifying a moderate bullish sentiment but a decrease from the 16% premium seen a week ago. It’s worth mentioning that during the recent dip below $60,000 on April 19, the premium held firm at a strong 9%. This suggests the market is showing cautious optimism without significant short-term wagers in preparation for the upcoming halving event.

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2024-04-19 21:41