The Bitcoin (BTC) price fell 5.5% from September 3 to September 5, hitting a low of $55,860. The price, which fell from $59,090, led to $58 million in liquidated leveraged long futures, suggesting that the bulls were not prepared. Despite this price weakness, Bitcoin derivatives have shown resilience, indicating that traders are not using excessive leverage or being overconfident.
Is Bitcoin’s Bull Market Over?
Some analysts claim that Bitcoin’s 2024 bull market is officially over, citing the all-time high of $73,757 that occurred nearly six months ago. On the other hand, some traders see the 30% plunge during that period as typical market behavior.
Regardless of market sentiment, historical BTC price increases following previous halving cycles have typically taken 5-6 months to materialize. Additionally, uncertainty surrounding the upcoming US presidential election and changes in US central bank monetary policy are adding to the current market volatility.
source: Armando Pantoja
Armando Pantoja, a cryptocurrency and blockchain technology educator, points out that Bitcoin tends to rally about 10 months after an increase in money supply. In this case, US M2 began expanding in February 2024, which suggests that if past trends hold, the added liquidity could impact Bitcoin prices until December.
However, regardless of whether past patterns are repeating, Bitcoin traders appear to be less responsive to price corrections, as shown by derivatives indicators. For example, prior to the crash on August 5, traders were overly optimistic about Bitcoin prices based on futures market data. As a result, the subsequent drop to $55,000 was followed by liquidations at $50,000.
Bitcoin 2-month futures annual premium. Source: Laevitas.ch
The current Bitcoin futures premium is approaching the lower end of the neutral range at 6%, with the neutral range being between 5% and 10%. During periods of high excitement, these monthly contracts can trade at a premium of over 10% compared to the regular BTC spot market due to the excessive demand for leveraged longs. More importantly, the indicators are unchanged from last week, indicating that demand for bearish bets (shorts) has remained flat.
To see if this sentiment is limited to the futures market, it is essential to also analyze Bitcoin options. The 25% delta skew measures the difference between call (buy) and put (sell) option premiums. Skewness above 7% indicates excessive downside risk, while values between -7% and +7% are considered neutral.
Bitcoin 1-month options delta skew, put-call on Deribit. Source: Laevitas.ch
Bitcoin options delta skew has remained neutral at 3% over the past seven days, showing resilience despite the BTC price down 6% over that period. This indicator tends to rise when whales and market makers anticipate a sharp price correction, so the data is consistent with the neutral tone seen in the Bitcoin futures market.
U.S. jobs market data will be crucial to Bitcoin’s near-term performance.
The ADP National Employment Report released on September 5th added to the downward pressure on Bitcoin prices. The report said that 99,000 jobs were added in August, which was below economists’ expectations and down from the 122,000 jobs added in July. A weak jobs market could challenge the Federal Reserve’s “soft landing” strategy, which aims to lower interest rates without triggering a recession.
relevant: Bitcoin Price Expected to Rescue Rally to $61,000 After Liquidation
Bitcoin investors may be cautious about adding new positions ahead of the September 10 U.S. payrolls data. According to Yahoo Finance, “another weak jobs report could add to market concerns and trigger more selling pressure.” A potential quality investment scenario often works in favor of gold and short-dated Treasuries, putting additional pressure on Bitcoin prices.
There are currently no clear signs that Bitcoin traders are turning bearish. Over the past six trading days, $804 million has flowed out of spot Bitcoin exchange-traded funds (ETFs). As a result, the resilience of BTC derivatives suggests that traders are currently comfortable with the $56,000 level, while bears are hesitant to bet on further price declines.
This article is for general information purposes only and is not intended to be, and should not be taken as, legal or investment advice. The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.