Fun

Bitcoin price loses steam, but futures markets forecast upside above $70K

News Feed - 2024-05-15 05:05:26

Marcel Pechman3 hours agoBitcoin price loses steam, but futures markets forecast upside above $70KBitcoin futures and options indicators remain stable even after BTC price swiftly rejected off the $63,500 level.4211 Total views208 Total sharesListen to article 0:00Market AnalysisOwn this piece of crypto historyCollect this article as NFTJoin us on social networksBitcoin (BTC) dropped 3.3% on May 14, retesting the $61,000 support level, which was quickly defended. More importantly, this correction marked the second failed attempt within a week to surpass $63,500. Despite the less-than-optimal price action, Bitcoin bulls remain confident, as shown by BTC derivatives metrics.


Although the current Bitcoin price trend appears bearish, some analysts believe it still has a good chance to revisit prices above $70,000.Source:Cryptotoad


Trader and analyst Cryptotoad was impressed by how long the $60,500 support level has held. However, he asserts that a higher high, likely a daily close above $67,000, is needed to break the current bearish pattern. While this analysis does not rule out a potential price recovery, it clearly indicates that the trend points to prices below $57,000 in May.U.S. inflation data puts short-term pressure on Bitcoin price


Investor disappointment on May 14 stemmed partly from the United States Producer Price Index (PPI) data for April, which showed a 0.5% month-over-month increase. The market interpreted the wholesale inflationary pressure as confirmation that the U.S. Federal Reserve (Fed) will keep interest rates higher for longer, which is detrimental to risk-on assets like cryptocurrencies and growth stocks.


Some argue that inflation is inherently positive for Bitcoin’s performance due to its strict monetary policy. However, during initial phases of fear and uncertainty, investors tend to seek cash and short-term bonds. Yields on 2-year U.S. Treasury notes dropped to 4.84% on May 14 from 5.03% on May 1, indicating that traders are paying a higher price for these fixed-income instruments.


It might seem counterintuitive to seek protection from an economic recession in U.S. Treasurys, but these assets are considered the safest as they are directly backed by the government, unlike money market funds managed by financial institutions. Therefore, while higher-than-anticipated inflation data should have triggered negative sentiment for Bitcoin, this was not reflected in derivatives data.Bitcoin derivatives show resilience despite lackluster BTC price action


To analyze if professional traders have become more pessimistic about Bitcoin following its drop to $61,000, one should examine BTC monthly futures contracts. In neutral markets, these contracts typically trade at a 5% to 10% premium relative to BTC spot markets to account for the longer settlement period.Bitcoin 2-month futures annualized premium. Source: Laevitas.ch


Data indicates that the annualized BTC futures premium was largely unaffected by the worsening macroeconomic conditions and Bitcoin’s repeated failure to sustain prices above $63,500 over the past week. The current 8% premium stands right in the middle of the neutral market, leaving a decent margin for negative surprises.


Related:Bitcoin hash rate dips as miners turn off unprofitable ASICs post-halving


One should proceed by examining the Bitcoin options market to determine if the demand for hedges increased after the most recent price correction. Typically, if market makers and whales expect a Bitcoin price drop, the BTC options skew metric will exceed 7%, whereas periods of enthusiasm often show a skew below -7%.Bitcoin 1-month options 25% delta skew. Source: Laevitas.ch


The BTC options 25% delta skew has remained in a neutral range since May 8, meaning market participants have priced call (buy) and put (sell) instruments similarly. According to this metric, the weakness in Bitcoin’s price did not impact how these professional traders assess risks for downside swings.


Bitcoin bears got what they wanted by displaying strength, as the last daily close above $65,000 happened three weeks ago, on April 23. However, bulls did not seem to be impacted by the lack of momentum, which appears mostly driven by investors’ temporary shift toward cash positions. If the inflationary issue in the U.S. persists, market participants may be forced to look for alternatives, so Bitcoin’s path to $70,000 for 2024 remains well in play.


This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.# Bitcoin# Cryptocurrencies# Federal Reserve# Bitcoin Price# Markets# Derivatives# Inflation# Futures# Market AnalysisAdd reaction

News Feed

Bitcoin Breaches 12-Year Support Line Against Gold – Is The Bull Run Over?
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Coinbase’s Stand With Crypto launches political action committee
Turner Wright7 hours agoCoinbase’s Stand With Crypto launches political action committeeThe advocacy group said it will begin officially endorsing political candidates for “common-sense crypto policy” in the U.S. S
Bitcoin, Ethereum Technical Analysis: BTC Below $19,000 as Sentiment in Crypto Remains Bearish
Bitcoin, Ethereum Technical Analysis: BTC Below $19,000 as Sentiment in Crypto Remains Bearish Bitcoin started the week trading below $19,000, as recent economic pressures continue
Moody’s States Inflation Is Affecting Economic Recovery in Part of Latam
Moody"s States Inflation Is Affecting Economic Recovery in Part of Latam Moody’s, the asset quality rating agency, has warned the high rate of inflation that some countries
Tyler Winklevoss donates $500K to John Deaton's campaign
Vince Quill2 hours agoTyler Winklevoss donates $500K to John Deaton"s campaignThe tech entrepreneur characterized incumbent Elizabeth Warren"s regulatory power over the Biden administration as a "Faustian bargain.&q
Biggest Movers: ADA Climbs to 11-Week High, as Crypto Markets React to US GDP Data
Biggest Movers: ADA Climbs to 11-Week High, as Crypto Markets React to US GDP Data Cardano raced to an 11-week high on Thursday, as markets reacted to data showing that gross domes
Japanese Video Game Giant Konami Reveals Castlevania 35th Anniversary NFTs
Japanese Video Game Giant Konami Reveals Castlevania 35th Anniversary NFTs The Japanese entertainment conglomerate and video game company, Konami Holdings Corporation, has revealed
Bitcoin halving puts focus on crypto education initiatives
Shiraz Jagati9 hours agoBitcoin halving puts focus on crypto education initiativesWith Bitcoin gearing up for its next deflationary jolt, here are some initiatives aimed at fostering a deeper understanding of the digital
Telegram Token Investors Reject Refund Offer
Investors in Telegram’s blockchain project have opted to stick with the firm despite the U.S. Securities and Exchange Commission (SEC)’s recent injunction against the messaging platform’s token offering.
Biggest Movers: DOGE, AVAX Fall to 1-Month Lows on Saturday
Biggest Movers: DOGE, AVAX Fall to 1-Month Lows on Saturday Dogecoin fell to a one-month low to start the weekend, as a red wave swept through cryptocurrency markets. Avalanche als
Tether, ICOs, Craig Wright – Attorney Divulges New Details on Billion Dollar Crypto Lawsuits
Tether, ICOs, Craig Wright - Attorney Divulges New Details on Billion Dollar Crypto Lawsuits On April 3, the law firms Roche Cyrulnik Freedman and Selendy & Gay filed 11 class-ac
Crypto Miners in Kazakhstan Start Paying Higher Electricity Fees
Crypto Miners in Kazakhstan Start Paying Higher Electricity Fees Since the beginning of 2023, cryptocurrency miners operating in Kazakhstan are obliged to pay new fees for the powe