Bitcoin has struggled to retest its all time high, riding on a wave of price consolidation. Still, fresh analysis of the derivatives market suggests Bitcoin could be headed for some choppy trading between $104,000 and $107,000. This implies that the digital currency might stay near its all-time high at least for the time being. The concurrent improvement in macro metrics and derivatives data adds more confidence to this outlook.
Although Bitcoin has failed to make any new highs, it has established significant historical support around the $102,850 level. This price point, if it holds, would provide a cushion in case of a price correction. Bitcoin’s current Open Interest is stable at about $33 billion. This lack of movement in either direction over the last week shows that traders are still not interested in taking on much new risk. This failure to go on the offensive may be one reason for this season of retreat and consolidation.
Historically, when Bitcoin’s price shifts at all within the $50,000 to $150,000 range, it usually results in short-lived corrections. These adjustments generally range from 5 to 10 percent. Additionally, the Bitcoin Funding Rate has been in the green for the last ten days. Even if there is a minor pullback, this durability is impressive. This optimistic funding rate shows that investors continue to have a bullish sentiment towards Bitcoin and expect continued price increases.
The positive funding rate sustained over time indicates robust investor confidence in Bitcoin’s future. Speculators are showing an eagerness to pay to carry longs, underscoring the view that prices should keep going up. This continued bullish sentiment naturally bolsters the case for further upside in the long-term, even with some short-term consolidation or small corrections along the way.
Looking back, there is a threat of downside risk. If we’re going off of history repeating itself, Bitcoin may very well make its way back down to the $93000-$98000 range. Although this doomsday scenario has not been ruled out completely, at this point, the market signals the opposite more sober narrative. The strong historical support level and overall positive mood among investors might help insulate the market from the full brunt of a correction if it happens.
The continued stability in Bitcoin’s macro metrics, along with Bitcoin’s budding derivatives market, offers even more reason for tranquility. These three combined factors indicate a more mature and resilient main street market, one that is more able to withstand the expected upcoming volatility. The constant Open Interest and modestly positive Funding Rate are factors that contribute to the overall market stability. This tight balance is a testament to tremendous investor confidence.
One of the most important forces at work in determining Bitcoin’s price dynamics has to do with the derivatives market. Our analysis of this nascent market indicates that there is room for further consolidation, but only within a narrow window. This data is an incredible resource for cryptocurrency traders and investors looking to cut through the noise and confusion surrounding the cryptocurrency boom busting out all over.
