The $ 11,000 drop this week occurred in just 32 hours and it is definitely an important milestone for Bitcoin (BTC) price.

Many mainstream media have interpreted the correction as the start of a new bear market, but the data do not support this kind of thinking.

Bitcoin may have corrected 26.5% as if it had dropped to test the $ 30K support again, but it has since shown great strength at a record high of $ 160 billion in derivatives.

Daily volume of Bitcoin futures in USD. Source: coinalyze.net
Spot exchanges also surpassed the previous record, which was set just three days ago on January 9th, when BTC rose to a new full-time high of $ 41,950. The staggering $ 27.7 billion recorded on January 11 was 60% higher than the previous peak.

Binance traded up to $ 9 billion with BTC, more than double the industry average in December 2020.

The infamous 50% crash on March 12, 2020 resulted in $ 8 billion in spot trading. In comparison, Ether (ETH) trading volume on January 11 was $ 16 billion.

Despite the recent bearish price action and $ 1.5 billion in long-term liquidations this week, Bitcoin is back more than 13% from the low of $ 30,300.

Despite the fact that the price failed to stay at the $ 36,000 level, which was observed in the early hours of January 12th, investors appear relatively calm and trading volumes do not indicate a further correction.

GBTC still has a nice bonus
While this accident may have frightened some under-the-hood buyers, it’s a very good sign. Another factor to consider is that GBTC Grayscale funds added 72,950 BTC in December, but suspended the issuance of new shares on December 24th. Meanwhile, Bitcoin nearly doubled from $ 23,200 to $ 42,000.

Grayscale Bitcoin Trust Premium. Source: TradingView
The fund manager has now resumed its normal activities for most cryptocurrencies, raising the question of whether the initial institutional flow can be attributed to the bullish BTC price movement. One thing is clear: the interest and demand from institutional investors is still there. Although Bitcoin price fell by 26.5%, GBTC premium remained above 14%.

Fixed premium for calendar futures remains stable
Professional traders tend to dominate long-term futures contracts with a fixed expiration date. Thus, by measuring how much of the futures contract is more expensive compared to the regular spot market, a trader can determine where the bull market is. Three-month fixed calendar futures contracts are usually required to trade at a premium of 1.5% or higher compared to regular spot exchanges.

When this indicator turns off or becomes negative, there is an alarming red flag. This position, also known as a reset, indicates that the market is in a downtrend.

The chart above shows that the futures premium was held above 3.5% during the storm, which corresponds to an annual level of 14.5% and indicates the optimism of professional traders.

The slope of options is upward
The buy / sell analysis will help determine if the recent downward price movement has destroyed bitcoin bullish sentiment among professional investors. Current skew level provides a real-time indicator of fear and greed based on the price of options.

Indicators of bias will be negative if the calls (neutral / bullish) are more expensive than the counterpart groups. The 10% level indicates that the buy options are trading at a premium to the bearer / neutral options. On the other hand, negative bias means a higher fall protection cost, indicating a downtrend.

The chart above shows how rapidly negative sentiment in the options market can change. After a sharp turnaround in both directions due to increased volatility, the index is now back at 10, reflecting a moderate bullish trend in options prices.

Bitcoin held on to support $ 30,000, and the bulls showed their confidence by adding positions during the fall. This indicates that there are currently no signs of fatigue or warning signals from the derived indicators.

Source: CoinTelegraph

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