On April 13, Bitcoin (BTC) experienced a sudden 13.3% price decrease, causing distress for many traders who had magnified their holdings. Consequently, approximately $387 million worth of long positions were forcibly sold off, and the total open interest decreased by around $5.4 billion. Initially, it seems that this market fluctuation reflected a diminished readiness among investors to take on risk.
Despite being used to market fluctuations, cryptocurrency traders might respond dramatically during periods of uncertainty. It’s essential to carefully assess whether the recent dip back to $61,500 was enough to instill panic or if it merely indicated a temporary setback, making the journey to $72,000 and an all-time high following Bitcoin’s halving less likely.
Did Bitcoin fail to provide a reliable store of value?
Although Bitcoin reached a modest bounce back to $63,500 on April 15, the general feeling among traders has grown more pessimistic. Consequently, it’s become tough for Bitcoin to maintain its ‘digital gold’ label, given this gloomy outlook. Furthermore, the recent price fluctuations highlighted weaknesses in the Bitcoin spot ETF. For instance, investors were unable to sell their holdings over the weekend, indicating potential drawbacks of investing indirectly through such funds.
In the past three months, institutional investors have poured large sums of money into Bitcoin spot Exchange-Traded Funds (ETFs) in the United States, driving up Bitcoin’s price. This influx has had an impact even when considering the outflows from Grayscale’s GBTC. The sector now manages a staggering $55 billion in assets, with major institutions like BlackRock, Fidelity, Bitwise, and VanEck actively courting these clients and top asset managers.
Gold’s status as a valued asset remains strong, with its price consistency during recent global turmoil and Middle Eastern conflicts reinforcing this reputation. Currently, gold is priced at $2,350, holding steady after hitting an all-time high of $2,432 on April 12.
Tom Linn, an analyst, posits that Bitcoin’s recent price fluctuations indicate investors don’t consider it a safe-haven asset like gold. This assessment might disregard the weekends when gold markets don’t function and other aspects, such as high leverage, possibly influencing Bitcoin’s behavior.
Based on historical information, the price trends of Bitcoin and gold have seldom aligned. The correlation coefficient can range from -1 to +1, with -1 indicating that the markets move in opposite directions, while +1 means they move in perfect harmony. A score of 0 signifies no correlation between the two assets.
The data shows that Bitcoin and gold do not follow each other closely in value, disproving arguments that Bitcoin has fallen short as a safe-haven investment like gold. Owning an asset that isn’t directly linked to traditional financial assets offers a distinct advantage.
Bitcoin derivatives held firm during the dip to $61,500
Examining the trend in Bitcoin’s monthly futures contracts is essential for assessing if professional traders have become more bearish. In stable markets, these contracts usually carry a premium between 5% and 10% due to their extended settlement duration.
The data indicates that Bitcoin’s annualized futures premium stayed above the 10% bullish level despite the recent drop in price to $61,500. In simpler terms, the price correction didn’t significantly influence the premium for BTC futures, as it remained in the bullish range according to the indicator.
Examining the Bitcoin options skew can provide valuable insights into market sentiment. A skew value above 7% implies investors anticipate a drop in price, while a skew under 7% indicates bullish expectations.
Over the last fortnight, the Bitcoin options delta skew has stayed around the average, indicating an equal interest in positive and negative investment strategies. Notably, Bitcoin’s dip to $61,500 on April 13 did not trigger any signs of fear or widespread selling among investors. In essence, the market information points to a calm and optimistic investor base.
Read More
- LDO PREDICTION. LDO cryptocurrency
- JASMY PREDICTION. JASMY cryptocurrency
- Chainlink to $20, when? Why analysts are positive about LINK’s future
- Citi analysts upgrade Coinbase stock to ‘BUY’ after +30% rally projection
- Why iShares’ Bitcoin Trust stock surged 13% in 5 days, and what’s ahead
- Spot Solana ETF approvals – Closer than you think?
- Orca crypto price prediction: Buying opportunity ahead, or bull trap?
- Can Ethereum ETFs outperform Bitcoin ETFs – Yes or No?
- How Potential Biden Replacements Feel About Crypto Regulation
- Why Shiba Inu’s 482% burn rate surge wasn’t enough for SHIB’s price
2024-04-16 01:36