Consolidation and Confidence
Bitcoin has been trading within a narrow 7% range since November 12, indicating a period of consolidation around $91,000. Despite this, derivatives indicate that professional traders remain confident in the bull market. The Bitcoin options delta skew has dropped to its lowest level in four months, suggesting the market is pricing a discount for put (sell) options.
BTC Options Delta Skew
- The 30-day options 25% skew at Deribit is currently at -3.9%, indicating bullish sentiment.
- Levels below -6% suggest confidence in the $87,000 support level, particularly from whales and arbitrage desks.
- A BTC options delta skew of -8.5% or lower would be a significant indicator of extreme bullishness.
Analyzing Momentum
While recent data suggests optimism, it is crucial to analyze the factors driving recent momentum. If analysts view MicroStrategy as the primary catalyst for Bitcoin’s surge to a new all-time high, signs should be visible in BTC futures and margin markets.
MicroStrategy’s Impact
- On November 18, MicroStrategy revealed an additional purchase of 51,780 Bitcoins.
- The company now holds over $29 billion in Bitcoin and is actively pursuing a plan to raise $21 billion through the issuance and sale of company shares.
- However, investors believe that Bitcoin has a greater chance of continued price appreciation if spot BTC exchange-traded fund (ETF) net inflows show signs of early adoption.
Futures and Margin Markets
To understand how professional traders are positioned, it’s essential to analyze Bitcoin futures and margin markets. Sustained demand for leveraged BTC futures indicates bullish sentiment, while increased use of price hedging suggests whales and arbitrage desks lack confidence in the current price momentum.
Futures Premium
- The Bitcoin two-month futures premium surged to 17% on November 18, far exceeding the 5%–10% neutral threshold.
- This level of optimism was last observed almost eight months ago, in late March, when Bitcoin successfully defended the $64,000 level after two weeks of downward pressure.
Margin Markets
- Unlike derivatives contracts, which always require a buyer and a seller, margin markets allow traders to borrow stablecoins to buy spot Bitcoin.
- The Bitcoin long-to-short margin ratio at OKX is currently 14 times in favor of longs (buyers).
- Historically, periods of excessive confidence have driven the indicator above 40 times, while levels below 5 times favoring longs are generally considered bearish.
Conclusion
Ultimately, Bitcoin derivatives and margin markets signal strong bullish momentum, regardless of the concentration of buy-side activity driven by MicroStrategy. The lack of a significant impact from the retest of the $88,700 level on November 17 further suggests that investors are not ready to exit at the first negative price swing.
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This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.