Bullish Stir in Bitcoin Market: Navigating the Surge and Noting Key Influencers
Summary:
On June 3, Bitcoin's value surged by 2.5%, reaching $69,400, fostering hope of reclaiming its $69,000 support level. This increase aligns with a seven-week high spike in Bitcoin's futures premium. Factors influencing this uptrend include GameStop's 36% growth, triggering a positive sentiment across the memecoin sector, and increasing uncertainty due to comments from Fed officials and geopolitical tensions. Key metrics like Bitcoin's futures premium and the 25% delta skew indicate cautious optimism among investors, providing a firm foundation for further price gains.
Bitcoin value experienced a 2.5% surge on June 3, reaching $69,400 and raising speculations of regaining $69,000 support level after 11 days. This favorable trajectory followed an increase in Bitcoin's futures premium, reaching a seven-week high. This development raises questions about Bitcoin's prospective rally towards $70,000.
The recent surge in Bitcoin is partly attributed to a 36% growth experienced by GameStop (GME), prompting investors to recall the 2021 retail investor wave trying to upend the conventional finance world. This positive vibe seems to have trickled into the memecoin sector, seeing Floki, Dogwifhat (WIF), and Bonk gain 16.5%, 9%, and 7.5% respectively.
Fed official Neel Kashkari's remarks added to the growing unease. He argued that Americans strongly resist inflation, causing him not to predict rate cuts in the foreseeable future. Although this view isn't shared across all Fed officials, it's been seen as a negative developement for the housing and stock markets, causing investors to explore alternatives like Bitcoin.
Additionally, the global geopolitical scenario has also contributed to Bitcoin's fluctuations. Australia's directive for Chinese investors to downsize their contributions to a rare earths miner has caused global market apprehensions. This event is linked to a gold hike of 1% and a sell-off in U.S Treasury bonds, where the 5-year yield has gone down to 4.42% from 4.59% as of May 31.
Bitcoin futures premium is the demarcation between derivative markets' monthly contracts and the spot level in routine exchanges. Normally, an annualized premium oscillates between 5% and 10% for extra settlement compensation. Higher premiums indicate traders' willingness to shell out more for future contracts, signaling bullish sentiment.
The 3-month futures premium for Bitcoin ascended to 15%, charting a seven-week high. This denotes a cautiously positive vibe among traders. It's necessary, however, to study Bitcoin options' 25% delta skew to understand if this is limited to futures markets.
The delta skew measures demand for options that are bullish and bearish. Negative skew implies higher call option demand (buy), and positive skew indicates put option (sell) preference. Balanced call and put option pricing typically reflect -7% to +7% delta skew in neutral markets.
The 25% delta skew for Bitcoin has been at around -3% for the past week, bringing to light a balanced sentiment among traders concerning short-term price adjustment. The market last showed optimistic signs on May 21, but it didn't last as traders found the $71,500 resistance hard to surpass.
The latest data hints at a balanced Bitcoin market, with factors including fears of recession, geopolitical turbulence, and a revival of anti-traditional finance sentiment driving demand. Critical metrics like Bitcoin futures premiums and the 25% delta skew indicate a prudent optimism among traders, setting a solid base for price surges to exceed $70,000.
Disclaimer: This article is purely informational and shouldn't be construed as legal or financial advice. The views expressed are solely those of the author and don't necessarily align with those of Cointelegraph.
Published At
6/3/2024 11:14:27 PM
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