Author: Marcel Pechman, CoinTelegraph; Translated by: Deng Tong, Golden Finance
Bitcoin has risen 6.5% since its low of $92,458 on December 23, but has failed to break through the resistance level of $98,000. After hitting an all-time high of $108,275 on December 17 last year, the stock market corrected sharply by 14.5%, and traders have regained confidence.
Bitcoin derivatives maintain a neutral to bullish stance, indicating that price volatility has not significantly affected market sentiment. This positioning supports the possibility of gold prices continuously rising 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. Typically, a premium of 5% to 10% is considered neutral, as sellers account for the factors of extended settlement periods in pricing.
Bitcoin 1-month options 25% Delta deviation (bearish options). Source: Laevitas.ch
Compared to equivalent bullish (buy) options, the trading price of Bitcoin bearish (sell) options has a 2% discount, consistent with trends from the past two weeks. This indicator typically exceeds 6% when whales and market makers anticipate a potential correction, 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 also propelled Bitcoin above $98,000. Additionally, the yield on the 10-year U.S. Treasury bond climbed 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 dilutes the value of bonds currently held. In contrast, scarce assets like stocks and Bitcoin tend to perform well when central banks are forced to stimulate the economy by injecting liquidity.
Amid economic uncertainty, Bitcoin faces stagnation concerns.
Due to concerns about the risk of global economic stagnation, the upside potential for Bitcoin 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 interest rate cut expectations, now indicating only two rate cuts in 2025, down from four previously anticipated. This adjustment lowers the short-term risk of declining corporate profits and potential issues in real estate financing.
To assess market sentiment, analyzing the Bitcoin margin market 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, favoring long (buy) positions. Historically, excessive confidence has pushed this ratio above 40 times, while levels below 5 times are generally considered bearish.
Both the 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 re-testing the $92,458 level on December 23 has strengthened optimism that Bitcoin could reach $105,000 or even higher.
