Improving Bitcoin price indicators point to weakening bear confidence and limited price downside

Click the avatar to watch the live broadcast and chat!

The recent performance of the Bitcoin market shows that bears are gradually losing confidence below $95,000, especially reflected in changes in open interest and leverage demand.

Open interest falls to two-month low

Bitcoin open interest, or open interest in the futures market, has fallen to 595,700 BTC, the lowest level since November 4. Open interest is down 11% from its peak of 668,100 BTC on December 20.

Long Liquidations: Bulls have experienced $470 million in liquidations since December 28, but interest from bears has similarly declined significantly, especially as Bitcoin tested below $92,000.

Market Signal: The decline in open interest indicates that investors are reducing their expectations for a significant price downside, suggesting that Bitcoin’s downside risks are limited.

Futures contango recovers, signaling growing bullish confidence

Annualized premiums in the futures market have increased from 9.5% on Dec. 28 to 15% currently, the highest level since Dec. 20.

Market Sentiment: Rising premiums suggest bulls remain confident despite recent weakness in prices.

Leverage Demand: The current premium suggests that the market is more geared towards providing support to the longs rather than increasing leverage demand from the shorts.

The impact of the macroeconomic environment

U.S. Treasury Secretary Janet Yellen’s debt ceiling warning became an important external driver for the Bitcoin market.

Debt Ceiling Crisis: Yellen warned that the federal government could hit the debt ceiling on January 14, and Congress’s resolution remains unclear.

Impact: If government spending cuts lead to pressure on the stock market, safe-haven assets such as Bitcoin may benefit, attracting more investor attention.

in conclusion

The downside for Bitcoin prices is gradually narrowing as open interest declines and contango recovers, while macroeconomic uncertainty may further enhance demand for Bitcoin. While bulls still have to defend the $95,000 support level in the near term, overall market sentiment is turning positive, providing potential opportunities for Bitcoin’s future upside.

Click the avatar to watch the live broadcast and chat!