Bitcoin bulls regain momentum: Derivatives data points to potential rally to $105,000 in value.

Despite showing renewed confidence after a 14.5% correction from its all-time high of $108,275 on Dec. 17, Bitcoin (BTC) has failed to surpass the crucial $98,000 resistance level.

A Brief Look at Recent Price Action

Bitcoin has gained 6.5% since hitting a low of $92,458 on Dec. 23, but its price action remains constrained by the strong resistance at $98,000. This has led to a renewed focus on the potential for a sustainable rally above $105,000.

Derivatives Market Suggests Neutral-to-Bullish Sentiment

The Bitcoin futures market is maintaining a neutral-to-bullish stance, with prices suggesting that the recent sharp price volatility did not significantly impact market sentiment. This positioning supports the likelihood of a sustained rally above $105,000.

Bitcoin 2-Month Futures Annualized Premium

**Source:** [Laevitas.ch](https://laevitas.ch)

The Bitcoin futures monthly contracts are trading at a robust 12% premium over the regular spot market. This indicates strong demand for leveraged long (buy) positions.

Typical Premium Ranges

• Neutral: 5-10%
• Bullish: >10%

Bitcoin 1-Month Options 25% Delta Skew (Put-Call)

**Source:** [Laevitas.ch](https://laevitas.ch)

The Bitcoin put (sell) options are trading at a 2% discount compared to equivalent call (buy) options, consistent with the trend over the past two weeks. When whales and market makers anticipate a potential correction, this indicator usually exceeds 6%, reflecting a premium on put options.

Traditional Financial Markets Contribute to Bitcoin’s Rise

The recent recovery in traditional financial markets also contributed to Bitcoin’s rise above $98,000 as the S&P 500 index erased its monthly losses on Dec. 24. Additionally, the US 10-year Treasury yield climbed to 4.59%, up from 4.23% two weeks earlier, suggesting that investors are demanding higher returns to hold government debt.

Impact of Rising Interest Rates and Inflation Expectations

The recent increase in US Treasury yields typically reflects expectations of higher inflation or rising government debt, which dilute the value of current bond holdings. In contrast, scarce assets like stocks and Bitcoin often perform well when central banks are compelled to stimulate the economy through liquidity injections.

Bitcoin Faces Stagnation Fears Amid Economic Uncertainty

Bitcoin’s upside remains constrained as investors worry about the risk of global economic stagnation. It is challenging to predict the full impact on stock markets and real estate assets under such conditions. Currently, Bitcoin’s correlation with the S&P 500 index is relatively high at 64%.

US Federal Reserve Adjusts Rate-Cut Projections

The US Federal Reserve has scaled back its rate-cut projections, indicating only two interest rate cuts in 2025, compared to the previously anticipated four. This adjustment reduces the short-term risk of corporate earnings declines and potential issues in real estate financing.

Assessing Market Sentiment Through Margin Markets

To assess market sentiment, analyzing Bitcoin’s margin markets is essential. Unlike derivatives contracts, which require both buyers and sellers, margin markets allow traders to borrow stablecoins to purchase spot Bitcoin or borrow BTC to establish short positions, betting on a price drop.

Bitcoin Margin Long-to-Short Ratio at OKX

**Source:** [OKX](https://okx.com)

The Bitcoin long-to-short margin ratio at OKX is currently at 25x in favor of long (buy) positions. Historically, excessive confidence drives this ratio above 40x, while levels below 5x favoring longs are generally considered bearish.

Record Outflows from BlackRock’s iShares Bitcoin Trust ETF

Despite record outflows from BlackRock’s iShares Bitcoin Trust ETF (IBIT) on Dec. 24, both Bitcoin derivatives and margin markets indicate bullish momentum. Moreover, the resilience shown during the retest of the $92,458 level on Dec. 23 reinforces optimism about Bitcoin’s potential to reach $105,000 and beyond.

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Disclaimer

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.

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