Bitcoin (BTC) price momentum has cooled since rebounding toward an all-time high on October 29, but derivatives markets continue to see traders optimistic about a price recovery.
Analysis of the Bitcoin futures and options market shows that traders are holding positions without excessive leverage, which is critical to a sustainable push towards new all-time highs. However, it is still important to understand what caused the price of Bitcoin to fall below $69,000 on November 1st.
Bitcoin 1-month options delta skew, put call. Source: Laevitas.ch
As expectations for a decline in Bitcoin prices increase, the 25% delta skew indicator typically tends to exceed 7%, indicating that put options are priced at a premium due to increased demand.
Despite the BTC price decline, Bitcoin derivatives appear stable.
To assess whether Bitcoin traders’ sentiment has weakened following the recent recession, it is useful to analyze the funding rates of perpetual contracts (inverse swaps). A neutral funding rate with no bullish leverage costs suggests a lack of strong confidence, while a rate exceeding 2.1% per month indicates excessive optimism.
Bitcoin perpetual futures 8-hour funding rate. Source: Coinglass
There was no significant impact on leverage demand on November 1st. Interest rates were generally neutral at 0.01% every eight hours and about 0.9% per month.
There is no indication that leverage was the primary driver of Bitcoin’s rise from $67,000 to $73,500 from October 27 to October 29, suggesting a healthy market trend. Overall, the Bitcoin derivatives market supports a continued bull market, potentially paving the way for further gains.
relevant: ‘Uptober’ sees Bitcoin price surge 11% as traders consider ‘nuclear’ rally
Various factors influence investor sentiment
From a trading perspective, key political and economic Bitcoin gains before it recovers to $71,000 on November 1 could be closely correlated with movements in the S&P 500 index, with both markets reacting to similar macroeconomic indicators. It suggests that they are doing it.
S&P 500 futures (left) and Bitcoin/USD (right). Source: TradingView
In the short term, during times of recession risk, traders often turn to cash positions and government bonds for safety. This pattern helps explain the recent decline in the stock market and Bitcoin after Intel reported a 6% decline in quarterly revenue compared to the previous year.
Recent financial disclosures from tech giants like Microsoft and Meta show increased AI investments and dampened expectations for revenue growth. The news comes shortly after shares of Super Microcomputer ( SMCI ) plunged 44% in three days following EY’s unexpected auditor resignation.
The market sentiment shifted somewhat on November 1 when the Bureau of Labor Statistics reported October payroll growth of just 12,000, short of expectations of 100,000.
In addition, wages in the United States increased by 0.4% compared to the previous month, raising concerns about inflation. Nonetheless, market analysts expect the U.S. Federal Reserve (Fed) to cut interest rates by 0.25% on November 7, via the CME FedWatch tool.
Events such as the US presidential election and Federal Open Market Committee (FOMC) decision on November 5th are desirable. Political pushes to stimulate the economy often lead to a decline in the value of the U.S. dollar, which could push Bitcoin prices higher in the medium term.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.