Bitcoin futures data hints at BTC price rally extending above $45k

Bitcoin (BTC) surpassed $45,000 on February 8, reaching the price level for the first time since January 12 after rallying 6% in two days. The move coincided with the S&P 500's all-time high on February 7, indicating that investors are seeking protection against inflation. In addition to crypto and stocks moving to new highs, Bitcoin derivatives data shows room for more bullish momentum.

Bitcoin has increased US government debt.

US government debt is currently at a historic high of $34.2 trillion. Some analysts and economists argue that the absolute number is lower than interest paid, but US Federal Reserve (Fed) Chairman Jerome Powell acknowledged the long-term “unsustainable fiscal path” in a February 4 interview.

This scenario provides a strong incentive for the US Fed to cut interest rates from the current 5.25% through 2024, which is in line with their fundamentals and market expectations. As returns on fixed income investments decline, investors seek refuge in stocks and commodities.

The Congressional Budget Office estimates that the US budget deficit could increase by 66 percent over 10 years. The Congressional Independent Fiscal Watchdog Group has warned that US total public debt is set to increase by more than 100% by 2025.

In addition to the nation's debt hike, the rate of U.S. consumer debt delinquency hit a 12-year high. Data from the New York Fed on Feb. 6 showed that consumer credit card debt balances reached an annual default rate of 8.5% in the final months of 2023, while auto loans reached 7.7%, according to Axios. The stress on the family balance can cause problems for the banking sector and the economy as a whole.

The uncertain macroeconomic backdrop gives opportunity to a few assets like Bitcoin, which partly explains the rally to $45,000. Still, there's no guarantee that the new price level will continue, so investors should analyze how whales and arbitrageurs are positioned to understand whether there is excessive leverage behind the move.

Bitcoin derivatives show no signs of over-optimism.

Pro traders choose monthly futures contracts due to the lack of financial volume, which makes these instruments 5% to 10% higher than regular markets to account for the long settlement period.

According to data, the BTC futures premium rose to its highest level in three weeks on February 8, breaking above the 10% threshold for bullish markets. Moreover, the indicator shows no signs of excessive optimism, which paves the way for Bitcoin to remain at the $45,000 support.

In order to rule out external factors that can only affect Bitcoin futures, one must analyze the options markets. A 25% delta skew pro can be evaluated if traders are more optimistic. In short, if traders expect a decline in the price of Bitcoin, the skew will rise above 7%, while bullish periods typically measure -7%.

After the price of Bitcoin broke above $45,000 on February 8, the 25% skew of BTC options entered the -7% bullish area for the first time in two months. Similarly to the BTC futures benchmark, the current level is not far from the neutral zone, indicating moderate optimism–which is extremely positive as some analysts fear worsening macroeconomic conditions could turn negative for Bitcoin's price.

Related: Spot Bitcoin ETF ‘Outperforms' Gold ETF – Core Scientific Founder

Bitcoin's price action after the approval of the Bitcoin Exchange Traded Fund (ETF) on January 10 explains why bulls are wary, as the increased volatility caused $150 million of long futures contracts to be violently liquidated in two days. Bitcoin's initial euphoria at $49,000 was followed by a 15.3% correction to $41,500 in less than two days. Therefore, the current parameters of Bitcoin derivatives are consistent with the current market conditions, which paves the way for further bullish momentum and a possible move towards $49,000.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.