Bitcoin Futures Drop to $90K ‘Regular Profit Taking’ – Why BTC Traders Keep Buying

Bitcoin (BTC) experienced unprecedented intraday volatility on December 5, with the cryptocurrency hitting a record low of $91,463 after a dramatic price swing of $12,396. Analysts estimate that more than $4 billion worth of BTC futures were liquidated during this period, surpassing the all-time high recorded during the FTX crash in November 2022.

What really stood out during the December 5th flash crash was the $5,160 retracement in less than 15 minutes as buyers aggressively defended the $96,500 support level. Moreover, Bitcoin derivatives benchmarks have already maintained their momentum, indicating that traders are confident of further upward momentum.

Bitcoin margin, futures and options markets show resilience

Analyzing Bitcoin margin markets is crucial to gauge market sentiment. Unlike derivatives contracts that require a buyer and a seller, margin markets allow traders to borrow stablecoins to buy spot Bitcoin or initiate BTC short positions to play against a decline in price.

Bitcoin's long-to-short margin ratio at OKX currently favors long (buy) positions at 20x. Historically, overconfidence pushes this ratio above 40x, while longs below 5x are generally interpreted as bearish.

Big investors or “whales” changed their sentiment after the rejection at the $103,500 level, data from the BTC futures markets is critical. The long-to-short ratio of senior traders consolidates positions on spot, perpetual and monthly futures contracts. A higher ratio indicates a preference for long positions, while a lower ratio indicates that professional traders lean toward short (sell) contracts.

On Binance, the long-to-short ratio currently stands at 1.65, similar to the level two days ago and above the two-week average of 1.52, which favors long positions. Meanwhile, OKX's main traders have become more bullish, with their long-to-short ratio rising from 1.15 to 1.37 over the same period. These metrics on Binance and OKX reflect a clear tilt towards bullish bets, in absolute terms.

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To assess whether professional traders are showing excessive confidence, Bitcoin options market information is crucial. A 25% delta skew serves as a key indicator, indicating when arbitrage desks and market makers are overbought from upward or downward movements. If traders are anticipating a price cut, the price will usually increase by more than 7%. Conversely, higher optimism tends to push the bear below -7%.

According to data from Laevitas.ch, the 25% delta skew of Bitcoin 2-month options is currently at -8%, matching the levels seen on October 4. A discount compared to call (buy) options. These findings reinforce the bullish sentiment that confirms the positive outlook for futures and margin markets.

Although it is not certain that Bitcoin will surpass the all-time high of $103,500 in the short term, initial parameters indicate strong confidence among traders. Even if the price drops to $90,000, such a move could be seen as a normal gain following Bitcoin's impressive 53% rally between November 5th and December 5th.

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.