Bitcoin Price Trading Below Resistance
The price of Bitcoin (BTC) is currently trading below its 2023 high, indicating that the $44,000 resistance may have been underestimated by investors. However, this doesn’t mean that reaching $50,000 and beyond is no longer possible.
Derivatives and Bitcoin’s Short-Term Crash
While derivatives markets may have played a role in the recent negative price movement of Bitcoin, it is important to note that the impact of forceful liquidation orders had dissipated long ago. This disproves the notion of a crash solely driven by futures markets.
Analyzing Bitcoin Futures Premium and Options Markets
To determine if Bitcoin whales and market makers are still bullish, traders should examine the Bitcoin futures premium and options markets. Despite the intraday price drop on Dec. 11, the BTC futures premium remained above the neutral-to-bullish threshold throughout. The options skew has also remained neutral since Dec. 5, indicating a balanced cost for both call and put options.
Retail Traders and Leverage
Data reveals that retail traders using leverage did not significantly influence the price action of Bitcoin. The modest increase in demand for leverage among long positions suggests healthy market conditions.
The Spot Market Driving Price Movements
The rally to $44,700 and subsequent correction to the current $41,300 appears to be primarily driven by the spot market. This reduces the odds of cascading liquidations due to excessive optimism tied to the expectation of a spot ETF approval.
Hot Take: Positive Momentum Persists for Bitcoin Bulls
Despite the recent price correction, derivatives indicate that positive momentum for Bitcoin hasn’t faded. This is good news for Bitcoin bulls and suggests that further gains are still possible.
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