Bitcoin started a rapid rise last night, breaking through multiple front resistances in succession, and reached a high of $99,480 around 2 a.m. today. The bulls seem to have regained the upward momentum.

Does Negative Premium on Coinbase Bitcoin Herald a Rebound?

Today, Western countries will usher in Christmas, the most important holiday of the year, so some investors were worried about whether Bitcoin would continue to decline due to lack of upward momentum.

Last night on the US-listed cryptocurrency exchange Coinbase, Bitcoin had a negative premium of -0.221%, suggesting that the current buying demand from US investors has eased slightly.

Based on historical data, this phenomenon will be short-lived during bull markets and is usually a buying opportunity:

The negative premium of Bitcoin on Coinbase reached -0.221%, the fifth time it has reached this level since May last year. The decline in this indicator suggests that buying pressure from U.S. investors has eased compared to investors on Binance.

Although it is not yet certain whether this pullback has bottomed out, if the bull market is still ongoing, the bottom will be formed soon and a rebound will occur.

From the figure below, although the coin price has fallen twice since May last year when the negative premium exceeded 0.2%, it did rebound soon after. For spot traders, this may be an indicator worthy of long-term attention.

Altcoins may see a rebound

About $20 billion worth of Bitcoin and Ethereum options will expire on Friday, and perhaps the market will usher in a new round of volatility.

If Bitcoin rebounds again to above $100,000, volatility may remain stable; but if Bitcoin still struggles below $100,000, it may trigger a rebound in altcoins:

A similar trend occurred a month ago when the Ethereum/Bitcoin exchange rate was rebounding from the 0.032 support level and boosted the movement of altcoins.
We are closely watching whether Bitcoin will continue to fall from its current level to confirm the rotation direction of market funds and the trends of other currencies.

The core factor of this round of correction is still the profit taking

In this cycle, whenever the profit margin of short-term investors reaches more than 30%, the probability of a pullback increases rapidly until their selling profit margin decreases or the cost of continued purchase is too high, and the market begins to evolve to the next stage.

At the same time, external changes also support adjustments. The main forces supporting the current round of BTC adoption rate to a higher level: the Fed’s interest rate cuts, the Trump effect, and micro-strategy BTC buying have passed the initial strong period and entered the inter-holiday period. Coupled with factors such as the Christmas holiday that have a greater impact on BTC ETFs, BTC’s adjustment is also expected.

The above factors are not short-term forces, and will help the long-term development of BTC in the long run. Take MicroStrategy as an example. It will officially enter the Nasdaq 100 Index on December 23, which will open the door for mainstream US funds to passively allocate BTC.

In the past week, the capital inflow has slowed down significantly, and it may last for 1-2 months. Correspondingly, the scale of selling by both long-term and short-term investors has also begun to slow down significantly, returning to the level before this round of pull-up. Under the balance of the two, the probability of the market being in a volatile market has increased.

During this period, if the funds maintain a relative net inflow state and the cost of short-term investors further rises to above US$90,000, the space for the next wave of main uptrend will be further opened up.

The relative support level of this round of adjustment may be at $85,000 - the cost line of short-term investors, which is currently rising gently.

Ethereum, like Bitcoin, tends to lose momentum when prices rise sharply, especially when prices rise by more than 60% in 30 days. Based on historical data, this is usually a good opportunity to profit.

Prices have now pulled back to about the same level as a month ago, which could mean a re-entry opportunity is brewing, especially if the cryptocurrency bull run is expected to continue into 2025.

Ethereum has not shown the higher cost-effectiveness in this round of rebound as in the previous bull market. However, it is still an asset favored by investors. The recent continuous inflow of ETF funds is the best proof. This strong demand not only highlights the important position of Ethereum, but also shows that it is still attracting attention even if its performance in this cycle is slightly lower than expected.