Author: Marcel Pechman, CoinTelegraph; Translated by: Deng Tong, Jinse Finance
Bitcoin has risen 6.5% since the low of $92,458 on December 23, but has failed to break through the resistance level of $98,000. After reaching an all-time high of $108,275 on December 17 last year, the stock market experienced a significant pullback of 14.5%, and traders regained confidence.
Bitcoin derivatives maintain a neutral to bullish stance, indicating that significant price volatility has not significantly impacted market sentiment. This position supports the likelihood of gold prices continuing to rise above $105,000.
Bitcoin 2-month futures annualized premium. Source: Laevitas.ch
The trading price of Bitcoin futures monthly contracts is 12% higher than the conventional spot market. This indicates strong demand for leveraged long (buy) positions. Generally, a premium of 5% to 10% is considered neutral, as sellers factor in the extended settlement period when pricing.
Bitcoin 1-month options 25% Delta skew (bearish options). Source: Laevitas.ch
Compared to equivalent bullish (buy) options, Bitcoin bearish (sell) options are trading at a 2% discount, consistent with trends from the past two weeks. This indicator usually exceeds 6% when whales and market makers anticipate a possible pullback, reflecting the premium of bearish options.
As the S&P 500 index erased its monthly decline from December 24, the recent recovery in traditional financial markets has also pushed Bitcoin above $98,000. Additionally, the yield on 10-year U.S. Treasuries has risen from 4.23% two weeks ago to 4.59%, indicating that investors are demanding higher returns for holding government debt.
The recent rise in U.S. Treasury yields typically reflects expectations of rising inflation or increasing government debt, which can dilute the value of currently held bonds. In contrast, scarce assets like stocks and Bitcoin tend to perform well when central banks are forced to stimulate the economy through liquidity injections.
Amid economic uncertainty, Bitcoin faces concerns of stagnation.
Due to investor concerns about the risk of global economic stagnation, Bitcoin's upside potential remains limited. In this context, predicting the comprehensive impact on the stock market and real estate assets is challenging. Currently, Bitcoin has a high correlation with the S&P 500 index, at 64%.
The Federal Reserve has scaled back its rate cut expectations, now indicating only two rate cuts in 2025, down from a previous expectation of four. This adjustment reduces short-term risks of declining corporate profits and potential issues in real estate financing.
To assess market sentiment, analyzing the margin market for Bitcoin is crucial. Unlike derivative contracts that require buyers and sellers, the margin market allows traders to borrow stablecoins to purchase spot Bitcoin or borrow Bitcoin to establish short positions, betting on a price decline.
OKX's Bitcoin margin long-short ratio. Source: OKX
The Bitcoin long to short margin ratio on OKX is currently 25 times, favorable for long (buy) positions. Historically, excessive confidence drives this ratio above 40 times, while levels below 5 times are typically considered bearish.
Both Bitcoin derivatives and margin markets show bullish momentum, despite record outflows from BlackRock's iShares Bitcoin Trust ETF (IBIT) on December 24. Additionally, the resilience shown when retesting the level of $92,458 on December 23 has strengthened optimism that Bitcoin could reach $105,000 or even higher.
