Bitcoin price weakens, but BTC derivatives remain healthy.

Bitcoin (BTC) struggled to rally above $98,000 from November 25 to December 2, disappointing investors despite a 38% monthly gain. Market participants worry that a prolonged consolidation below the $100,000 psychological barrier could encourage strategies to suppress BTC's price.

Derivatives markets suggest resilience, with traders paying a 17% annual premium for targeted positions compared to the spot price of BTC. While below 40% levels during a strong bull run, the current premium reflects healthy bullish demand and does not indicate excessive optimism.

Although Bitcoin failed to surpass the $99,609 peak from November 22, exchange data continued to boost trader confidence. However, questions remain over the sustainability of recent aggressive buying, particularly from the likes of Bitcoin exchange-traded funds (ETFs), MicroStrategy and Marathon Digital.

Microstrategy raised 15,400 BTC between November 25 and December 1, using the $1.5 billion raised in the stock sale. The purchases were made for an average of $95,976, raising the company's total BTC holdings to 402,100, currently worth $38.4 billion, a 64 percent increase.

Similarly, Marathon Digital acquired 6,484 BTC between October 1 and November 30, spending more than $600 million at an average of $95,352 per coin. The company has announced plans to issue a $700 million convertible senior note with the aim of acquiring additional bitcoins while purchasing existing debt.

However, it is incorrect to attribute Bitcoin's price rise to institutional buying only. In particular, spot ETFs recorded net inflows of $3.22 billion as of Nov. 18, Farside Investors said. Before these earnings began, BTC was already trading above $90,000, highlighting strong demand beyond corporate balance sheet additions.

Bitcoin options and futures indicate market confidence

Bitcoin options markets reflect optimism from whales and arbitrage tables that call (sell) options are trading at an 8% discount compared to call (buy) options. Typically, when traders feel comfortable about the price of Bitcoin, the demand for a limit will increase, making the indicator above 6%.

Retailers play a vital role, though they command smaller spaces than institutional players. In the year Bitcoin's 1,000% price increase in 2017, for example, charts Coinbase app downloads and top Google searches for “buy bitcoin”. So underestimating the influence of middlemen would be short-sighted.

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Tracking durable contracts (inverse swaps) is important to gauge retail consumption demand. These contracts, which expire every eight hours, closely track the price of BTC. Funding rate—a key indicator of market sentiment used to balance demand between leveraged buyers and sellers.

Typically, lenders (buyers) pay a monthly financing fee of 0.5% to 2.1%. However, during peak periods, this rate can increase to 6% or more. The current 1.4% allowed long-term payout falls within the neutral range. Last week's temporary high of 3.5% is not even alarming and does not pose immediate liquidation risks.

Bitcoin's inability to breach the $98,000 level should not be interpreted as weakness given the strong conditions in BTC derivatives markets. Both institutional and retail participants show confidence in Bitcoin's continued bull run. The trend is supported by increasing adoption among corporations and countries seeking BTC as a hedge against inflationary fiat currencies.

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.