Bitcoin (BTC) has continued to hover around $96,000 since December 28. Although it has not effectively broken through this key psychological level, market data shows that bearish confidence is gradually weakening. With open interest dropping to its lowest point in two months, derivatives market indicators are also sending positive signals, suggesting that the downside risk for Bitcoin prices seems to be limited.
Decrease in open interest: market participants reduce leverage exposure
As of now, the open interest in Bitcoin has decreased from a peak of 668,100 BTC on December 20 to 595,700 BTC, marking the lowest level since November 4. This data indicates that while the bears have a certain advantage in the short term, the overall reduction in market leverage demand also limits the downside potential for prices.
Moreover, the bullish market sentiment remains strong, and the contract premium is an important signal in this context. From the perspective of monthly contract premiums, the current annualized premium of 15% has reached a new high since December 20. This indicates that despite Bitcoin's recent poor performance, bulls still have strong confidence in future trends.
U.S. debt stalemate: market uncertainty and potential positives
Recently, U.S. Treasury Secretary Janet Yellen warned that if the debt ceiling issue is not resolved, the federal government may face the risk of debt default on January 14, 2025. While this fiscal stalemate may weaken investors' risk appetite in the short term, it may also further enhance Bitcoin's appeal as a safe-haven asset.
Especially in an environment of increased uncertainty in fiscal policy, the Bitcoin exchange-traded fund (ETF) valued at over $105 billion provides a hedging tool for the market, further supporting the long-term bullish outlook for Bitcoin.
Improvement in perpetual contract indicators: the market leans bullish
As an important indicator of retail investor sentiment, the funding rate for perpetual contracts has now risen to 1.3%, the highest level in two weeks. Although this rate is still within a neutral range, its upward trend indicates that bullish sentiment toward Bitcoin is building.
At the same time, the improvement in funding rates also reflects that bulls are absorbing market pressure. As the willingness of bears to increase positions below $95,000 weakens, the price trend of Bitcoin shows a more positive outlook.
Bulls still dominate
Based on comprehensive indicators such as open interest, contract premiums, and perpetual funding rates, bullish sentiment in the Bitcoin market still dominates. Despite attempts by bears to push prices down, the gradual recovery of market demand and the attractiveness of hedging tools provide solid support for Bitcoin prices.
Short-term challenge: $95,000 remains an important psychological level that needs to be broken; if it can hold this level, Bitcoin is expected to move towards higher target areas.
Long-term bullish outlook: Uncertainty over the U.S. debt issue may further enhance Bitcoin's safe-haven properties, reinforcing its market positioning as 'digital gold'.
Do you think Bitcoin can hold above $96,000 and continue to rise amid upcoming market fluctuations? Feel free to share your insights in the comments!
