Bitcoin Derivatives Hint at Possible Rally Above $73K – Next New All-Time High
Bitcoin (BTC) gained 8.5% in 24 hours to $71,926 on May 21st. Moreover, BTC derivatives are showing favorable conditions to break new all-time highs in the coming weeks.
The 4% daily jump in BTC prices appears to be fueling optimism around the US spot Ethereum exchange-traded fund (ETF) and overall market conditions seeking inflation protection. This trend pushed gold and the S&P 500 to new all-time highs on May 20.
Many traders are wondering what the recent price increase in Bitcoin is due to widespread overuse of long positions and the implications of the Spot Ether (ETH) ETF.
After the US Senate repeal, the regulator's position will change.
Senior Bloomberg ETF analyst Eric Balchunas raised the odds of approval of the Ethereum Space ETF from 25% to 75% due to political pressure on May 20. This adjustment followed a landmark decision by the US Senate on May 16 that overturned SEC Bulletin 121, which imposed stricter capital requirements on banks holding client digital assets.
Before the Senate vote, President Biden indicated that he could use his executive powers to veto any decision that would change the SEC's policy.
However, the Senate's decision to adopt cryptocurrency has prompted a strategic review of the White House, according to Perianne Boring, founder and CEO of the blockchain trade association Digital Chamber.
SEC Chairman Gary Gensler has previously expressed interest in classifying Ethereum as a non-security or suggesting the possibility of approving its own ETF.
But the landscape changed dramatically on May 20 when it was reported that the SEC had requested an amendment to the position of Ethereum ETFs from exchanges such as the NYSE and Nasdaq.
Despite potential competition from Ethereum, the introduction of the spot ETF could be beneficial to the cryptocurrency sector at large, creating a more favorable environment for investment.
The waning anti-crypto regulatory stance in the US may encourage many investment managers, including pension funds, to take a more favorable view of the sector. Historically, regulatory uncertainty, targeting mining operations or privacy-focused intermediaries, has negatively impacted Bitcoin's value.
Bitcoin derivatives are somewhat bullish.
The rise in Bitcoin prices on May 21st led to an increase in demand for BTC long positions in monthly futures. Under normal market conditions, these derivatives carry a 5% to 10% premium over the spot price to compensate for their extended settlement period.
The data showed that the BTC futures premium rose to 14%, the highest in five weeks. This indicates a modest bullishness, in stark contrast to the situation on April 1, when the futures premium hit 25%—a level that usually indicates high market optimism.
Examining the options market is insightful to better understand the dynamics at play. A 25% delta skew helps measure the impact of recent price trends. A bullish market typically sees -7% biased (put) options become cheaper.
Related: MicroStrategy 500% Annual Profits Bitcoin, Tesla Stock – Is MSTR the Best Short-Term Bet?
The current -8% reflects a healthy market sentiment in Bitcoin options markets, especially since the price of BTC increased by 23% in 19 days, while the options market remained relatively stable.
Bitcoin derivatives market data suggests that there is still room for strategic leverage among Bitcoin buyers without fear of over-optimism, which can lead to significant liquidity during unexpected price declines. This gives a more promising outlook for BTC prices in the coming weeks, where it could break new all-time highs above $74,000.
According to popular crypto analyst Game of Trades, the bullish momentum could provide Bitcoin with “key moving averages” and “channel support” to $80,000.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
