Bitcoin price analysis indicates bulls are likely to maintain $30K as a support level
The recent surge in the price of Bitcoin (BTC), which saw a 24.3% rally between June 15 and June 23, has caught many investors off guard. This unexpected rally not only resulted in $165 million in liquidation of short futures contracts for the bears but also caused discomfort for those using Bitcoin derivatives. However, despite the positive price movement, concerns regarding inflation and the potential economic recession continue to loom.
Bitcoin Derivatives Market
Bitcoin quarterly futures contracts, primarily popular among whales and arbitrage desks, typically trade at a slight premium to spot markets. This premium, also known as “contango,” is a healthy market situation that indicates sellers are demanding a higher price to delay settlement. Ideally, BTC futures contracts should have an annualized premium of 5% to 10%.
Currently, the demand for leveraged long positions in BTC has slightly increased, pushing the futures contract premium to 4.3% on June 22. Although this is below the neutral threshold of 5%, it shows a positive sentiment in the market.
Additionally, analyzing the options markets can provide insights into investor sentiment. The 25% delta skew, which measures arbitrage and market makers’ pricing for upside or downside protection, is an essential metric to watch. A skew above 7% indicates anticipation of a Bitcoin price drop, while a negative skew suggests periods of excitement.
The 25% delta skew metric shifted from “fear” mode to “greed” sentiment, showing an improving trend, which aligns with Bitcoin’s price rise from the $26,000 support level. This indicates a balanced market sentiment among BTC derivatives traders.
Factors Affecting Bitcoin Derivatives Market
While the Bitcoin derivatives market shows modest improvements, there are external factors that may impact this trend. The ongoing legal battle between Binance and the U.S. Securities and Exchange Commission (SEC) poses a risk for BTC futures contracts, as Binance holds a significant market share in both the spot and derivatives markets for cryptocurrencies. The outcome of the court’s decision could have a substantial effect on the overall cryptocurrency market.
Moreover, uncertainty surrounding the crypto regulatory environment and the growing risks of an economic recession could be reasons for the lack of excitement among Bitcoin derivatives traders. However, given the absence of any apparent catalyst for a significant BTC price correction, the current market sentiment remains positive, providing room for further growth.
It is important to note that this analysis should not be considered as legal or investment advice. The views expressed here are solely the opinions of the author and do not reflect the views of Cointelegraph. Readers are advised to conduct their own research and make informed decisions regarding investments and trading.
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