BTC reclaims $69k, derivatives signal additional upside

The NFT Unicorn 28b04f4c-9d07-423e-b098-d20c4e8476d1 BTC reclaims $69k, derivatives signal additional upside Crypto News

Bitcoin (BTC) regained support at $69,000 on June 12 after its price dipped to $66,000 the previous day owing to macroeconomic uncertainties, miner selling pressure, and outflows from spot exchange-traded funds (ETFs). Moderately positive inflation data in the United States set a more favorable stage for risk-on assets, including Bitcoin, propelling the S&P 500 to a record high on June 12.

Traders are now debating whether Bitcoin can surpass the $72,000 mark, with the derivatives market seeming to support such a possibility.

Resilient inflation favors risk-on assets including Bitcoin

The United States Consumer Price Index (CPI) for May showed a 3.3% increase from the previous year, propelled by a 3.6% decrease in energy prices. According to CNBC, this data, although higher than the U.S. Federal Reserve’s (Fed) target, was lower than market expectations and suggests potential interest rate cuts by September. Consequently, U.S. Treasuries saw selling pressure, pushing the 2-year yield to its lowest in 10 weeks at 4.68%.

To determine if Bitcoin’s surge on June 12 was just short-lived optimism sparked by macroeconomic data, it’s crucial to assess whether the miner and ETF outflows will continue. Regardless of the optimistic view on inflation and the odds of an economic recession that investors might be considering, Bitcoin’s trajectory towards $72,000 will largely hinge on institutional inflows.

Moreover, even sophisticated investors are concerned that miners may dictate BTC price trends. When large transfers from miners to exchanges occur, investors worry about a steep price drop, and June 11 was no exception. According to Julio Moreno, head of research at CryptoQuant, Marathon Digital sold 1,000 BTC, valued at nearly $70 million, on June 10. Such a sale, although possibly a one-time event due to unforeseen circumstances, negatively affects investor sentiment towards Bitcoin.

To exacerbate the situation, U.S.-listed spot Bitcoin ETFs saw a collective net outflow of $65 million on the same day. As a result, traders speculated that these entities anticipated potential issues, leading to a significant net outflow of $200 million from spot ETFs on June 11, just before critical macroeconomic events including a speech by Fed Chair Jerome Powell after the monetary council meeting on June 12.

Bitcoin derivatives displayed resilience during $66,000 dip

During the dip to $66,000, Bitcoin’s primary derivatives metric showed resilience, suggesting that traders were not over-reliant on excessive leverage. The Bitcoin futures premium, which measures the difference between the futures markets’ monthly contracts and the spot level on standard exchanges, generally reflects a 5% to 10% annualized premium (basis) to compensate for the longer settlement period.

Bitcoin 2-month futures annualized premium. Source: Laevitas.ch

The Bitcoin 2-month futures premium briefly touched the neutral 10% level on June 11 but quickly rose to 13%. This recovery indicates a cautiously optimistic attitude among traders, especially since the basis rate can exceed 40% during extremely bullish periods.

To accurately assess whether the demand for leveraged long futures reflects the overall market sentiment, it is crucial to analyze the balance between the demand for call (buy) and put (sell) options. An uptick in put option activity typically indicates a shift towards a more neutral or bearish market outlook.

Related: Bitcoin whale accumulation reaches pre-2020 bull run levels — Is BTC set to break $70K?

The NFT Unicorn c9ee293f-4abe-4ef2-9bb7-0f5e3ae07fd1 BTC reclaims $69k, derivatives signal additional upside Crypto News
Deribit BTC options put-to-call volume ratio. Source: Laevitas

Although data from June 10 and June 11 still showed a predominance in call options volume, the put-to-call ratio reached its highest level in two weeks, suggesting a slight increase in demand for protective put options. Nevertheless, both the Bitcoin futures and options markets indicate that, despite a bearish turn near the $66,000 level, the prevailing sentiment remains bullish. This suggests that the potential for Bitcoin to achieve further gains up to $72,000 is still viable.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Source: Cointelegraph