Aside from the short test of $ 18,100 on December 1, Bitcoin (BTC) markets have remained relatively calm throughout the week. This indicates that investors are starting to realize that after rallying 77% from October, the consolidation period could be longer.
When the bitcoin price stabilizes, there is always a growing expectation of altcoins up. Not so recently, as BTC’s dominance increased 0.8% this week to 63.6%.
This move indicates that investors are either waiting for a breach of the $ 20,000 resistance level or are fearful of potential negative price fluctuations. Consequently, this move indicates a decline in confidence in the alternative digital currencies.
The chart above shows how Bitcoin managed to gain market share this week. Aside from Nem (XEM), the remaining altcoins rose 0.5%. Volumes were disappointing overall, although this could be partly explained by a build-up of BTC at $ 19,200.
When traders hesitate, they cut positions and wait for better entry points. So the drop in volume this week was a correction, not a lack of interest.
Institutional investors are accumulating while the bitcoin price holds
Cryptocurrency fund manager Grayscale Investments has continued to actively add BTC to its $ 10 billion portfolio.
Nearly 13,000 BTC were added over the past week, for a total of 547,000. So this was another great week for the Grayscale Bitcoin Trust. Similar tension can be seen by analyzing the effective BTC premium that each stock has, currently 0.00095153 BTC.
As shown above, the premium increased to 22% from 11% in the previous week. The index has maintained an average premium of 14% over the past 90 days. As such, it reflects positive momentum as it recently reached a 6-month high.
Permanent futures financing remained stable
Perpetual contracts, also known as inverse swaps, have a built-in interest rate that is usually charged every eight hours. Funding exchange rates ensure that there are no currency risk anomalies. Although the open interest of buyers and sellers is always the same, the leverage can vary.
When there are (aspiring) buyers demanding more influence, the financing rate becomes positive. Hence, buyers will pay a commission. This problem is especially true during an uphill run, when there is usually a greater demand for lust.
Prices stable above 2% for the week are indicative of intense optimism. This level is acceptable while in the market, but it does present a problem if BTC price is in a sideways or downtrend.
In such cases, strong purchasing power increases the likelihood of a large selloff in the event of a sudden drop in prices.
Funding rates for permanent bitcoin futures. Source: Data on digital assets.
Notice how despite the stagnant bitcoin price, the weekly funding rate has managed to maintain a healthy level. This data shows that traders are still optimistic even though they are far from over-leveraged.
There was also a moment of temporary buzz in the early hours of December 1, when BTC tested the $ 19,900 level.
The futures premium peaked but has since returned to normal.
Funding levels can lead to some distortions as it is the preferred tool for retailers and is affected excessively as a result. On the other hand, professional traders tend to dominate long-term long-term futures contracts.
By measuring how expensive a futures contract is compared to the regular spot market, a trader can determine its bullish level. Fixed-calendar futures contracts usually trade at a premium of 0.5% or higher over regular spot exchanges.
When this indicator turns off or becomes negative, this 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 index briefly touched 2% on December 1, but was later corrected to 0.9% as Bitcoin was unable to overcome the $ 20,000 resistance. Despite the decline, it remained above the 0.5% minimum, indicating the optimism of professional traders.
Options / Terms of Sale
By gauging whether more activity is coming through calls or selling options, overall market sentiment can be gauged. Buy options are usually used for bullish strategies and sell options are used for bearish strategies.
The bet ratio of 0.70 indicates that put options are open at 30% and therefore bullish.
On the other hand, the Index 1.20 supports short options at 20%, which can be considered bearish. It is worth noting that the account consolidates the entire BTC options market, including all calendar months.