Bitcoin Trades Below $57K, But Evidence Shows Professional Traders Aren’t Stupid

From September 3 to September 5, the price of Bitcoin (BTC) fell 5.5%, reaching a low of $55,860. This led to a long run of liquid gains from $59,090 to $58 million, suggesting bulls were not caught off guard. Despite this price weakness, Bitcoin derivatives are showing a recovery, indicating that traders are not over-indulging or over-confident.

Is the Bitcoin Bull Market Over?

Some analysts argue that Bitcoin's 2024 bull run is officially over, citing the high of $73,757 that occurred nearly six months ago. On the other hand, some traders see a 30% return during this period as a normal market behavior.

Regardless of market sentiment, historical BTC price rallies following past half-cycles have taken five to six months to materialize. In addition, the uncertainty surrounding the upcoming US presidential election and the US central bank's monetary policy changes will add to the current market volatility.

According to Crypto and blockchain technology guru Armando Pantoja, Bitcoin starts to accumulate 10 months after its money supply increases. In this example, the US M2 began expanding in February 2024, suggesting that if past trends hold true, the added liquidity will impact Bitcoin's price in December.

However, despite the repeats of historical patterns, Bitcoin traders seem to have underreacted to price corrections, as indicated by initial metrics. For example, prior to the August 5 crash, traders were overly optimistic about Bitcoin's price based on future market data. As a result, the liquid chain, which had dropped below $55,000, dropped to $50,000.

Currently, the Bitcoin futures premium is at 6%, approaching the lower border of the neutral range, which ranges from 5% to 10%. During times of heightened excitement, excessive long-term interest may push these monthly contracts to trade at a premium of 10% or more to the regular BTC spot markets. More importantly, the indicator remains unchanged from last week, indicating that bearish (short) interest is flat.

To determine if this sentiment is limited to the futures market, it is important to analyze Bitcoin options as well. The 25% delta skew measures the difference between call (buy) and put (sell) option premiums. A swing of more than 7% indicates the risk of excessive reduction, values ​​between -7% and +7% are considered neutral.

The delta skew of Bitcoin options has remained neutral at 3% over the past seven days, during which BTC price has shown resistance despite a 6% decline. This indicator rises when whales and market makers anticipate a sharp price correction, so the data is consistent with the neutral tone seen in Bitcoin futures markets.

US labor market data will be critical to Bitcoin's near-term performance.

The ADP National Employment Report released on September 5 added downward pressure on the price of Bitcoin. The report showed that 99,000 jobs were added in August, which fell short of economists' expectations and less than the 122,000 jobs added in July. A weak labor market could pose a challenge to the US Federal Reserve's “soft landing” strategy of lowering interest rates without triggering a recession.

Related: Bitcoin price eyes ‘relief rally' to $61K after downside liquidation wipeout

Bitcoin investors may be cautious about adding new positions ahead of the September 10 US payrolls data. According to Yahoo Finance, “Another weak jobs report could add to market concerns, prompting more selling pressure.” A flight to quality often leverages gold and short-term government bonds, putting additional pressure on the price of Bitcoin.

Currently, in the last six trading days, despite the withdrawal of 804 million dollars from the spot Bitcoin exchange-traded funds (ETFs), there are no clear signs that Bitcoin traders are turning bearish. As a result, the resistance in BTC derivatives suggests that traders are comfortable with the current level of $56,000, while also indicating that bears are hesitant to bet on further price declines.

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.