Bitcoin futures and options indicate that the recent decline in the price of BTC to $61,500 had no appreciable effect on investor confidence.
Many traders were driven to exit the market by the 13.3% decline in the price of Bitcoin between April 12 and April 13, especially those who had leveraged their positions.
This huge shift resulted in forced long position liquidations of $387 million and a $5.4 billion decrease in open interest.
The price movement and its impact on the futures markets appear to indicate a reduction in risk appetite at first glance.
However, traders in cryptocurrencies are used to volatility and frequently overreact when things are unclear.
To find out if the retest of $61,500 was enough to cause panic or if it indicates that there is less chance of an all-time high of $72,000 following the halving of Bitcoin, a closer look is required.
Many traders were driven to exit the market by the 13.3% decline in the price of Bitcoin between April 12 and April 13, especially those who had leveraged their positions.
This huge shift resulted in forced long position liquidations of $387 million and a $5.4 billion decrease in open interest.
The price movement and its impact on the futures markets appear to indicate a reduction in risk appetite at first glance.
However, traders in cryptocurrencies are used to volatility and frequently overreact when things are unclear.
To find out if the retest of $61,500 was enough to cause panic or if it indicates that there is less chance of an all-time high of $72,000 following the halving of Bitcoin, a closer look is required.
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Even with the slight rebound to $63,500 on April 15, traders’ general mood has soured, making it difficult to maintain the narrative that portrays Bitcoin as “digital gold.”
The price volatility also revealed flaws in the spot Bitcoin ETF, especially as investors were unable to liquidate their holdings over the weekend.
The limitations of indirect exposure to Bitcoin through these kinds of securities were made clear by this situation.
Bitcoin’s price has been greatly impacted by recent inflows into U.S. spot ETFs, even after taking outflows from Grayscale’s GBTC.
In just three months, the industry has grown to manage $55 billion in assets, helped along by high-profile visits to institutional clients and major asset managers by sales teams from BlackRock, Fidelity, Bitwise, and VanEck.
Gold’s standing as a store of value is still unquestioned, particularly in light of its price stability notwithstanding recent political unrest around the world and the intensifying hostilities in the Middle East.
After hitting an all-time high of $2,432 on April 12, the metal is currently trading around $2,350, staying steady throughout the previous week.
Analyst Tom Linn notes that, in contrast to gold, which increased in value after news of armed hostilities broke on April 12, previous price swings indicate investors do not see Bitcoin as a safe haven.
This analysis might, however, ignore the fact that gold markets are closed on weekends and that other factors, including high leverage, might have affected Bitcoin’s performance.
The price movements of Bitcoin and gold are rarely synchronised, according to historical statistics. The correlation index goes from -1, which means that certain markets move against one other, to +1, which means that all markets move perfectly symmetrically.
If there is no link at all between the two assets, the score would be 0.
Contrary to assertions that Bitcoin has failed as a store of wealth, the data shows that the cryptocurrency is not connected with gold.
This demonstrates the benefit of owning an asset that is not directly related to conventional financial assets.
An examination of BTC monthly futures contracts is essential to ascertain whether professional traders have become more bearish about Bitcoin.
These contracts usually have a premium in neutral markets, ranging from 5% to 10%, which represents the longer settlement term.
Amidst Bitcoin’s price fluctuations, the resilience of its futures premium above the 10% neutral-to-bullish threshold, despite the recent dip to $61,500, speaks volumes. However, delving into the Bitcoin options skew is imperative for a comprehensive understanding of market sentiment.
A skew indicator of more than 7% usually signifies forecasts of a price decrease, whilst a skew of less than 7% implies optimistic sentiment.
The 25% delta skew of BTC options has stayed in a neutral range over the last two weeks, indicating a balanced demand for bullish and bearish strategies.
The fact that there was no sense of fear when Bitcoin tested the $61,500 support level on April 13 is another noteworthy aspect.
All things considered, market data does not point to any serious worries or a decline in investor optimism.
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