The speculative frenzy surrounding Bitcoin since Trump won the U.S. presidential election is gradually cooling down in spot and derivatives markets.
The largest digital asset fell below $87,000 on Friday after Federal Reserve Chairman Jerome Powell said there was no need to rush to cut interest rates, leaving Bitcoin about $6,500 below its all-time high hit on Wednesday.
In the derivatives sector, K33 Research said that the premium of Bitcoin futures listed on the Chicago Mercantile Exchange relative to the spot market price has declined. Data from Amberdata showed that the open interest (i.e., uncommitted contracts) of put options with a strike price of $80,000 for Bitcoin surged sharply in 24 hours.
“The market seems to be cooling down,” said Vetle Lunde, head of research at K33, adding that the narrowing of futures premiums “could be a subtle hint of a moderate risk appetite.”
Bitcoin has risen about 30% since the U.S. election on Nov. 5 in response to President-elect Donald Trump’s pro-crypto stance. The digital asset is now seen as part of the so-called “Trump trade,” and speculators are wondering how much more fuel the rally has.
Trump promised to create a friendly regulatory framework for cryptocurrencies, establish a strategic Bitcoin reserve, and make the United States a global cryptocurrency hub. Trump was once a skeptic of cryptocurrencies, but changed his stance after digital asset companies invested heavily to promote their interests during the campaign. Questions remain about the feasibility and implementation timeline of his promises.
After Election Day, investors have seen a net inflow of $4.7 billion into U.S. spot bitcoin exchange-traded funds. The 12 funds, from issuers such as BlackRock and Fidelity Investments, now have total assets of about $94 billion, according to data compiled by Bloomberg.
“All trading right now is pure speculation,” said James Davies, CEO of Crypto Valley Exchange, an on-chain options and futures trading platform. “Expect a lot of volatility and a lack of clear signals in the coming period as we await policy announcements from the U.S.”
Davies pointed out that $90,000 is a key indicator that needs to be closely watched to see if it can act as a "resistance level" or whether Bitcoin can stand strong above this level. Data from the Deribit exchange shows that one of the highest concentrations of bullish Bitcoin options bets is at a strike price of $100,000.
Outside of bitcoin, smaller tokens such as second-largest ether and retail favorite dogecoin were mixed on Friday, in line with a decline in risk appetite as traders reduced bets on a Fed rate cut following Powell's comments.
Article forwarded from: Jinshi Data
