Resilient BTC Derivatives Remain Steady Despite Fluctuations, Targeting $50K

Bitcoin Derivatives Remain Resilient Despite Fluctuations

Although Bitcoin (BTC) has been trading below its 2023 high and struggling to stay above $41,000, derivatives data suggests that traders are still optimistic and have set their sights on a $50,000 target and beyond.

While a $127 million liquidation of leveraged long Bitcoin futures occurred recently, this only represented less than 1% of the total open interest and its impact on the market has faded away.

Despite dropping to around $40,200 on Monday, Bitcoin’s price quickly rebounded and is currently up 2.7% from its lows.

Futures Premium Indicates Bullish Sentiment

Contrary to initial beliefs that the recent correction was driven by derivatives markets, it appears that spot selling is at least partially responsible.

However, analyzing the Bitcoin futures premium reveals stability even after the price drop. The premium has remained above 10%, which is considered a threshold between neutral and bullish sentiment in the market.

The BTC options market also supports this notion of resilience. Despite a 6.1% correction since December 10, the options skew remains neutral, indicating a balance between bullish call options and bearish put options.

Rise in Futures Funding Rate

Furthermore, retail traders using leverage seem to have an impact on BTC’s price action.

Data shows that the positive funding rate for perpetual contracts, which indicates increased demand for leverage among long positions, experienced a modest increase from December 8 to December 10.

This rise suggests that long positions in Bitcoin futures and perpetual contracts did not drive the recent rally or subsequent liquidations, and that spot markets may have played a more prominent role.

Hot Take: Derivatives Data Points to Continued Bullish Momentum

In summary, despite the fluctuations in Bitcoin’s price, derivatives data remains positive and indicates that the bullish momentum around Bitcoin is still intact. Traders are now looking towards the $50,000 mark as the next major price milestone.