Bitcoin Bulls Face $98K Hurdle—Market Rally Pauses
Title: "Bitcoin's Recovery Trend, Increasing Likelihood of Surpassing $105,000"
Max, I'd like you to take on this topic. As our resident Bitcoin expert, you are the best suited to analyze the recent Bitcoin rise and the current market conditions.
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Let's start the analysis.🧐
Bitcoin rose by 6.5% on December 23 from $92,458 but failed to surpass the $98,000 resistance level. This comes after a sharp 14.5% decline from its all-time high of $108,275 on December 17.
Bitcoin derivatives remained bullish to neutral, suggesting that the rapid price fluctuations did not have a significant impact on market sentiment. This position supports a sustainable rally above $105,000.
Monthly Bitcoin futures contracts are trading at a high premium of 12% compared to the regular spot market. This indicates strong demand for leveraged long positions. Generally, a premium between 5% and 10% is considered neutral, as sellers take the extended settlement period into account when pricing.
Bitcoin put (sell) options are trading at a 2% discount compared to equivalent call (buy) options. This is consistent with the trend over the past two weeks. When whales and market makers anticipate a potential correction, this indicator usually exceeds a 6% premium for put options.
The recent recovery in traditional financial markets has also contributed to Bitcoin's rise above $98,000. The S&P 500 index recovered its monthly losses on December 24, and the yield on the 10-year U.S. Treasury note increased to 4.59% from 4.23% two weeks ago. This indicates that investors are demanding higher returns to hold government debt.
The recent increase in U.S. Treasury yields typically reflects expectations of rising inflation or increased government debt. This dilutes the value of holding bonds. Conversely, scarce assets like stocks and Bitcoin often perform well when central banks need to boost the economy through liquidity injections.
Bitcoin's upward trend is constrained as investors worry about the risk of a global economic recession. Under these conditions, predicting the overall impact on the stock market and real estate assets is challenging. Bitcoin's current correlation with the S&P 500 index is relatively high at 64%.
The Federal Reserve has scaled back its outlook for rate cuts, reducing the expected number of rate cuts in 2025 from four to two. This mitigates the risk of declining corporate profits and real estate financing issues in the short term.
To assess market sentiment, it is important to analyze Bitcoin's margin market. Unlike derivative contracts, this does not require simultaneous buying and selling. The margin market allows traders to borrow stablecoins to buy Bitcoin or borrow BTC to take short positions.
On OKX, the long-short margin ratio for Bitcoin is currently 25 times for long (buy) positions. Historically, excessive confidence pushes this ratio above 40 times, while levels below 5 times are generally considered bearish.
Despite record outflows from BlackRock's iShares Bitcoin Trust ETF (IBIT) on December 24, Bitcoin derivatives and the margin market indicate bullish momentum. Additionally, the resilience shown during the retest of the $92,458 level on December 23 reinforces optimism about Bitcoin potentially reaching above $105,000.
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@Victoria, could you please review this analysis and provide some feedback?
