Multiple indicators, including BTC futures premium and Grayscale GBTC, show that the price of Bitcoin rose 26.5% in October, reaching its highest level in a year. Therefore, it may be challenging to make a bearish argument for Bitcoin because the data reflects the recovery period after the crash and is also affected by the recent interest rate hike by the Federal Reserve.

Positive developments for Bitcoin

Despite the positive indicators, the price of Bitcoin is still around 50% below its all-time high of $69,900 reached in November 2021. This significant difference undermines the importance of Bitcoin, which has risen 108% since the beginning of the year, as it emphasizes that its adoption as an alternative hedging tool is still in its early stages.

It is critical for investors to analyze the macroeconomic environment before deciding whether improvements in Bitcoin futures premium, open interest, and GBTC fund premium signal a return to normalcy or initial signs of institutional investor interest.

On October 30, the U.S. Treasury Department announced plans to auction $1.6 trillion in debt over the next six months. However, according to CNBC, the most important factors to consider are the size of the auction and the balance between short-term Treasury bills and long-term bonds.

Billionaire and Duquesne Capital founder Stanley Druckenmiller criticized Treasury Secretary Janet Yellen’s focus on short-term debt, calling it “the biggest mistake in Treasury history.” The unprecedented rise in debt ratios in the world’s largest economy has led Druckenmiller to praise Bitcoin as an alternative store of value.

Bitcoin Futures

The increase in open interest in Bitcoin futures reached its highest level since May 2022, reaching $15.6 billion. This growth can be attributed to institutional demand caused by economic inflation risks. In particular, CME has become the second largest Bitcoin derivatives trading venue, with Bitcoin futures trading volume reaching $3.5 billion.

Additionally, the bitcoin futures premium, which measures the difference between the spot price and the price of two-month contracts, has reached its highest level in more than a year. These fixed-month contracts typically trade at a small premium to the spot market, suggesting that sellers may be demanding more money to delay payments.

The demand for leveraged Bitcoin long positions has increased significantly. On October 31, the futures contract premium rose from 3.5% to 8.3%, breaking the 5% neutral-to-bullish threshold for the first time in 12 months. Therefore, the positive development of Bitcoin indicates a return to normalcy for cryptocurrencies, rather than optimism.