The Bitcoin (BTC) price may have regained $ 50,000 in support, but professional traders’ optimism is far from the levels seen before 26% fell to $ 43,000 on February 28.
The current scenario is far from the opposite, but the derivative indices do not reflect large purchases from institutional clients, including Microstrategy, Meitu and most recently Aker ASA, a Norwegian oil conglomerate.
The longer bitcoin stays above a certain threshold, the more secure investors will be. For example, the end of last day was less than $ 45,000 28 days ago. Thus, it can take up to two weeks to establish a more reliable level of support. For this reason, professional traders may not feel comfortable walking as long as US government and dollar interest rates rise.
Regardless of the reasons why BTC’s current comfort level is around $ 50,000, the price correction that followed the peak time of $ 58,300 caused massive settlements, which partly explains the recent lack of an upward trend from professional traders.
This fall in prices resulted in the termination of $ 3.6 billion long futures contracts from 21-25. February, and such sudden moves have a major impact on arbitrage trading, as whales and market participants are forced to add security (margin).
The future premium remained at a very good level
The basis is also called the futures premium and measures the premium on a long-term futures contract at the current spot market level.
Fixed-month contracts usually trade for a small premium, which indicates that sellers are asking for more money to stop the settlement for a longer period. In healthy markets, futures contracts must be traded at an annual premium of 10% or more, known as contango.
When this indicator turns off or becomes negative, there is an alarming red flag. This situation is called lag and indicates that the market is in a downward trend.
The chart above shows that the index peaked at 35% on February 17 when Bitcoin broke through the $ 50,000 resistance. However, it held above 16% to $ 43,000 throughout the correction.
Given the 16% interest rate offered for stable deposits on platforms such as Yearn.finance, Aave and Curve, it can be assumed that professional traders are not in the mood for a bullish or bearish sentiment towards Bitcoin at the moment.
Deviations on options have shifted from bullish to neutral
To illustrate the state of the trend, investors should take a look at the bitcoin option markets. Purchase options allow the buyer to receive BTC at a fixed price after the expiration of the contract. On the one hand, put options insure buyers and protect against falling bitcoin prices.
When market makers and professional traders look for growth, they will demand a higher premium on call options. This trend will result in a negative delta deviation index of 25%.
A negative delta deviation of 10% seen before 21 February indicated that the bullish hedging premium had risen and was considered bullish. On the other hand, the recent negative 5% indicator is neutral, as the premium on call and put options is almost balanced.
Some will say that the glass is half full, since the recent rebound in the BTC price was not enough to arouse interest from arbitration agencies and professional traders. However, this skeptical perception leaves room for surprise when these whales eventually give in to the appetite of institutional buyers.
In any case, the fact is that derivatives markets unexpectedly held ground during the recent fall of 26% when tested at $ 43,000.