Bitcoin price rallies in half a day, but what do the futures markets show?
Bitcoin (BTC) experienced a sharp 6% decline on April 19, 2010, falling to a low of $59,640 before quickly recovering to find support above $64,500 in the early hours.
This rebound has been fueled by optimism surrounding the upcoming Bitcoin halving scheduled for April 20, which typically attracts a lot of interest from both traditional media and Bitcoin exchange-traded fund (ETF) providers. This phenomenon seems to help offset the negative effects of broader socio-economic challenges.
In the current turbulent times, the geopolitical landscape adds to the volatility of the market. As tensions rise in the Middle East, Bitcoin's price movement seems to correlate with global events. However, it was helped by encouragement from Iranian officials who said there were no plans for a recovery, thereby calming the market's nerves.
During periods of intense volatility, low liquidity will reinforce the $60,000 support
Despite Bitcoin's $5,850 price swing on April 19, liquidity in BTC futures remains relatively thin, totaling around $45 million, according to Coinglass data. This indicates that market participants are underutilized, which is the $60,000 level, which has become a major psychological support.
Amina Bank's cryptocurrency analysts say geopolitical tensions aren't the only drivers of market sentiment. According to their research, “trading volumes, ETF flows and news from US inflation data are also critical.” These analysts also pointed out that miners are selling their Bitcoin holdings during the halving, trying to make a profit before the reward is reduced.
From an economic perspective, resilient US inflation data and strength in the labor market supported retail sales growth of 0.7% year-over-year, reducing the chances that the US Federal Reserve will cut interest rates in the next couple of weeks. months. This skepticism was reflected in the S&P 500 index's 5% decline after retesting its high of 5,265 on March 28.
Bitcoin's halving close has not produced any relevant changes in BTC futures metrics.
A bird's eye view of the BTC derivatives markets is a good starting point for analyzing whether the Bitcoin half has resulted in high bets. According to BTC futures, the current open interest stands at $29.8 billion, up slightly from $28.6 billion two days ago. This modest increase shows that Bitcoin's halving event did not trigger significant demand.
Looking at the larger time frame, BTC futures demand looks low compared to last week's $35.5 billion. Therefore, there is no sign of excessive demand due to the mere halving of Bitcoin expectations.
Related: Is Bitcoin's Negative Futures Funding Rate a Sign of an Upcoming BTC Price Crash?
To understand the position of professional traders after a huge price change, one should analyze the BTC futures premium. Such a measure carries a 5%-10% annual premium compared to spot markets, indicating that sellers are demanding more money to extend settlement.
The 3-month BTC futures premium is currently 11%, which is slightly bullish but represents a 16% decline from last week. Notably, even during the $60,000 quick test on April 19, the premium managed to maintain a solid 9 percent. The data suggests that while the market is cautiously optimistic, it is not rushing to make short-term speculative bets in anticipation of the halving event.
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.
