- Multiple Bitcoin price measurements show that traders are still bullish in BTC even after falling below $ 22,000. While Bitcoin (BTC) price tested the low of $ 17,580 on December 11, investors remained relatively calm, although some analysts posted bearish predictions. Last week’s trade may have ended at the same level it started from. However, the foundations of Bitcoin have become even stronger.
Multiple Bitcoin price measurements show that traders are still bullish in BTC even after falling below $ 22,000. While Bitcoin (BTC) price tested the low of $ 17,580 on December 11, investors remained relatively calm, although some analysts posted bearish predictions. Last week’s trade may have ended at the same level it started from. However, the foundations of Bitcoin have become even stronger.
Every time Bitcoin takes a new rise, investors expect some kind of correction. Although it failed to break the $ 24,000 resistance, the price jumped rapidly from its decline below $ 22,000 on December 21. This incident may have given some hope to the sellers.
Over the past week, Bitcoin dominance has continued to increase as it rose from 64.3% to 67.3%. This move was supported by Dubai-based financial consulting firm deVere Group’s $ 46,000 forecast for 2021. Moreover, the Chicago Mercantile Exchange (CME) has exceeded $ 1.3 billion in futures contracts. This constitutes indisputable evidence of increased institutional involvement in BTC markets.
This news seems to give more confidence to investors and causes Bitcoin to hit an all-time high of $ 24,300 on December 20.
Last week, Bitcoin outperformed the top 15 altcoins that rose 7.7% on average. More importantly, the volume of altcoins was disappointing compared to Bitcoin’s 50% increase. This indicator strengthens the recent dominance performance as BTC set $ 22,500 as a new support.
Institutional investors accumulate as Bitcoin price consolidates
Crypto fund manager Grayscale Investments has continued to aggressively add BTC to their portfolios, which currently contain $ 13.3 billion in Bitcoin.
Last week, 11,620 BTC was added. That’s why it’s been another perfect week for Grayscale Bitcoin Trust. A similar excitement can be seen by analyzing the fund’s premium on effective BTC owned by each share currently in 0.00095064 BTC.
As shown above, the premium has increased from 18% to 40% in the last seven days. This extraordinary level can be explained, in part, by the temporary suspension of new shares issued.
A similar move, albeit unusual, took place six months ago. With the offer to corporate clients stopped, any additional demand must be met by secondary sales, putting pressure for a larger premium.
Continuous futures financing keeps stable
Permanent contracts, also known as reverse swap, usually have a built-in fee that is charged every eight hours. Financing rates ensure that there is no currency risk imbalance. Although the open position of both buyers and sellers is always matched, leverage can vary.
When buyers (long products) are demanding more leverage, the funding rate turns positive. Therefore, the buyers will be the ones who pay the fees. This problem is especially relevant during bull run, when there is more demand for long products.
Sustainable rates above 2% per week mean extreme optimism. This level is acceptable during market rallies but is problematic if the BTC price is in a sideways or downtrend.
In such cases, the high leverage from buyers increases the likelihood of massive liquidation when the price suddenly drops.
Notice how the weekly funding rate escaped the negative zone despite Bitcoin’s weakness on December 21st. These data show that both short (sell) and long (buy) traders use approximately the same leverage.
Social network activity reached its peak
Data from TheTie also shows that a recent BTC price increase has taken place, as tweets about ‘Bitcoin’ reached their highest level since December 2017. Despite the recent correction in the social activity indicator, the current level remains 10% higher than the previous month.
While a significant increase in Twitter activity does not equal strong retail buying, it certainly helps to attract more attention as the cryptocurrency continues to rise.
The ratio of options
The best way to measure overall market sentiment is to measure whether more activity is through (buy) options or sell (sell) options. Generally, buy options are used for bullish strategies while sell options are in a bearish trend.
A buy-sell rate of 0.70 indicates that the open position ratio of put options is delayed by 30% more calls for a bullish increase, and therefore an increase.
In contrast, the 1.20 indicator supports put options by 20%, which can be considered as a downward trend. One point to note is that the metric gathers the entire BTC options market, including all calendar months.
When bitcoin price exceeded $ 20,000, investors sought downside protection. As a result, the buy-sell ratio peaked at 1.08 on December 19th. Indicates a decline from more neutral
The unconventional level of favoring strategies that resulted was soon back when the indicator returned to 0.60.
This shows that investors’ optimism has not suffered from the 10% price correction that followed the all-time high of $ 24,200.
Bitcoin holds $ 22,500 as support while traders remain optimistic
Overall, each of the indicators discussed quickly returned to the neutral-to-bullish range, which is relatively positive considering the market recently tested a low of $ 21,910.
As BTC stays above $ 22,500, consistent returns from every bottom are interpreted as a positive sign as investors quickly regain their confidence.