Bitcoin saw a 5% increase in value on September 11 after testing the $25,000 support level. However, while this breakout rally may seem like a win for bulls, it actually highlights Bitcoin’s struggle to gain momentum. Since July, Bitcoin has experienced a 15% decline, while assets like the S&P 500 index and gold have remained relatively stable during the same period.
Despite significant catalysts such as MicroStrategy’s plans to acquire an additional $750 million worth of BTC and the increasing requests for Bitcoin spot exchange-traded funds (ETFs) from trillion-dollar asset management firms, Bitcoin has failed to gain the same upward momentum. However, Bitcoin derivatives suggest that bulls remain confident in the $25,000 level as a bottom, signaling potential for further price gains.
Some experts argue that Bitcoin’s primary drivers for 2024, such as the prospects of a spot ETF and the reduction in new supply following the April 2024 halving, are still in play. Additionally, recent developments in the cryptocurrency market, like the United States Securities and Exchange Commission experiencing partial losses in three separate cases involving Grayscale, Ripple, and the decentralized exchange Uniswap, have alleviated some immediate risks.
On the other hand, bears have their own advantages. Ongoing legal cases against leading exchanges like Binance and Coinbase, as well as the troubled financial situation of Digital Currency Group after one of its subsidiaries declared bankruptcy in January 2023, could impact Bitcoin’s price. Debts exceeding $3.5 billion may lead to the sale of funds managed by Grayscale, including the Grayscale Bitcoin Trust.
To better understand the market conditions, it is important to look at derivatives metrics. Bitcoin monthly futures typically trade at a slight premium to spot markets, known as contango. Currently, BTC futures premiums remain below the 5% neutral threshold, indicating a lack of demand for leveraged long positions. In options markets, the 25% delta skew metric assesses market sentiment. Although it previously indicated a 9% premium on protective put options, suggesting a correction, it has now leveled off at zero, indicating a balanced pricing between call and put options.
The macroeconomic uncertainty surrounding events like the upcoming release of the Consumer Price Index report and retail sales data may favor bears. However, the fact that derivatives markets held up during the dip below $25,000 is a promising sign for bulls. Both bulls and bears have significant triggers that could influence Bitcoin’s price, but the timing of events such as court decisions and ETF rulings remains challenging to predict. As a result, derivatives metrics have remained resilient, as caution is exercised by both sides to avoid excessive exposure.
It is important to note that this article is for general information purposes only and should not be taken as legal or investment advice. The views expressed are the author’s alone and do not necessarily reflect the views of Cointelegraph.
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