Bitcoin has gained 6.5% since its Dec. 23 low of $92,458 but failed to break the $98,000 resistance level. This recovery follows a sharp 14.5% correction from its $108,275 all-time high on Dec. 17. Despite the recent volatility, Bitcoin derivatives maintained a neutral-to-bullish stance, supporting the potential for a rally above $105,000. Derivatives Signal Market Optimism Bitcoin futures monthly contracts are trading at a 12% premium over spot prices, signaling strong demand for leveraged long positions. Premiums between 5% and 10% are considered neutral, making the current level robust. Additionally, Bitcoin put (sell) options are at a 2% discount compared to call (buy) options. When significant corrections are expected, this indicator typically exceeds 6%, showing a preference for puts. Traditional Market Recovery Boosts Bitcoin Traditional financial markets also supported Bitcoin’s recent rise above $98,000. The S&P 500 index erased its monthly losses on Dec. 24, and the US 10-year Treasury yield climbed to 4.59%, up from 4.23% two weeks earlier. Higher Treasury yields often reflect inflation expectations, making scarce assets like Bitcoin more attractive during economic uncertainty. Economic Concerns and Stagnation Fears Bitcoin’s correlation with the S&P 500 index remains high at 64%, tying its performance to broader economic trends. The US Federal Reserve has reduced its 2025 interest rate-cut projections from four to two, lowering the immediate risks to corporate earnings and real estate markets. Margin and Derivatives Markets Stay Bullish On OKX, the Bitcoin long-to-short margin ratio is at 25x in favor of longs. Excessive confidence typically pushes this ratio above 40x, while bearish sentiment sees it drop below 5x. Despite record outflows from BlackRock’s iShares Bitcoin Trust ETF on Dec. 24, Bitcoin’s resilience at $92,458 reinforces optimism about reaching $105,000 and beyond.
