Bitcoin is seeing some green during this week’s market open and seems poised to retake higher levels in the near term. The number one crypto after market capitalization endured some of its worst months on record, but the bulls were able to hold the line around $15,500.
Now the macroeconomic outlook is changing and could start to support further gains for risk-on assets. As of this writing, Bitcoin is trading at $17,200 with 2% and 5% gains over the past 24 hours and seven days, respectively.
BTC price is moving sideways on the 4-hour chart. Source: BTCUSDT trade view
The bitcoin market is returning to normal
Data from crypto derivatives exchange Deribit suggests a shift in market sentiment. Participants are more bullish on Bitcoin following the collapse of crypto exchange FTX and the fall of its co-founder and former CEO Sam Bankman-Fried.
This event pushed Bitcoin to a new yearly low and back to 2020 levels. As seen in the chart below, the BTC Open Interest Weighted Annualized Basis shows that option contract prices were in backwardation.
In other words, options were cheaper than their underlying asset, Bitcoin, after FTX collapsed. The last time BTC experienced a similar backwardation was in July 2021, during the second capitulation event that triggered a 40 percent crash in the crypto market.
However, the chart shows that July 2021 market sentiment and backwardation were a far cry from their November 2022 levels. Additionally, the chart shows that the heavy selling triggered by recent events is fading and the crypto market is normalizing. Deribit explained:
On July 21, the entire curve did not invert as longer-dated contracts were still trading at a premium. However, as of November 8th of this year, we see the entire curve trading below spot.
BTC’s near-term price rally is more likely
Coupled with the above, Deribit claims BTC 25 Put Skew, a metric used to gauge market sentiment by looking at demand for put (sell) options contracts, and its implied volatility is also declining. Puts were expensive during the FTX fallout but are returning to their “normal” levels. Deribit said:
A decline in the 1-month skew indicates that shorter-term out-the-money calls are becoming more expensive relative to out-the-money puts.
In other words, market participants buy more call (buy) contracts. These options have a short-term expiry date. This is how people might be preparing for a Christmas or year-end rally.
As NewsBTC reported, the maximum pain point, the strike price at which a large portion of the contract expires worthless, is $20,000.
BTC options open interest for expiry on December 30th. Source: Deribit
Source: Crypto News Deutsch