Bitcoin (BTC) struggled to break above $98,000 between November 25 and December 2, disappointing investors despite a 38% gain for the month. Investors are concerned that prolonged accumulation below the psychological threshold of $100,000 could encourage bearish strategies aimed at suppressing BTC prices.
Derivatives markets have proven resilient, with traders willing to pay an annual premium of 17% over the BTC spot price for leveraged positions. While lower than the 40% level typically seen during strong price rallies, the current premium still reflects healthy buying demand and does not indicate excessive optimism.
Although Bitcoin failed to break through the peak of $99,609 on November 22, derivative data still shows that traders' confidence is maintained. However, the question is whether the recent strong buying activity, especially from Bitcoin spot ETFs, MicroStrategy, and Marathon Digital, is sustainable.
MicroStrategy and Marathon Digital have increased their Bitcoin purchases.
From November 25 to December 1, MicroStrategy used $1.5 billion raised through stock sales to purchase an additional 15,400 BTC. The average purchase price was $95,976, bringing the company's total BTC holdings to 402,100, currently valued at $38.4 billion, an increase of 64%.
Similarly, Marathon Digital purchased 6,484 BTC from October 1 to November 30, spending over $600 million at an average price of $95,352 per coin. The company also announced plans to issue $700 million in convertible bonds to continue purchasing more Bitcoin while restructuring existing debt.
However, maintaining Bitcoin prices does not solely rely on institutional buying. Since November 18, spot ETFs have recorded a net inflow of $3.22 billion. Before this capital inflow, Bitcoin was trading above $90,000, indicating that strong demand is not just about increasing corporate balance sheets.
The Bitcoin derivatives market reflects strong confidence.
The Bitcoin options market shows optimism among major investors, as the trading price for put options is 8% lower than that for call options. Typically, when traders are concerned about Bitcoin prices, the demand for hedging increases, pushing the index above 6%.
Retail traders, while holding smaller positions than institutions, also play an important role. In 2017, Bitcoin prices surged by 1,000%, coinciding with the Coinbase app reaching the top of the download charts, and Google searches for 'buy Bitcoin' also peaked. Therefore, ignoring the impact of retail traders would be a mistake.
To assess the leverage demand from retail traders, it is necessary to monitor perpetual contracts. These contracts are settled every eight hours and closely track the spot price of Bitcoin. The funding rate—used to balance the leverage demand between buyers and sellers—is an important signal of market sentiment.
Typically, buyers pay a funding rate of 0.5% to 2.1% per month. However, during periods of high excitement, this rate can surge to over 6%. Currently, the 1.4% cost paid by buyers is still within a neutral range. Even last week's temporary peak of 3.5% is not concerning and will not immediately pose a liquidation risk.
The inability of Bitcoin to break through $98,000 should not be interpreted as a sign of weakness, especially in light of the optimistic sentiment in the BTC derivatives market. Both institutional and retail traders express confidence in a bullish trend for Bitcoin. This trend is supported by increasing adoption by corporations and nations, as they view Bitcoin as a hedge against fiat inflation. Therefore, it is still too early to say that Bitcoin prices have peaked.
