The Bitcoin (BTC) price rose to its highest level in 40 days on July 22, reaching an intraday high of $68,518. The 10-day gain of 19.4% was fueled by investors’ confidence in a 2024 rate cut by the U.S. Federal Reserve, the end of the German government’s Bitcoin selloff, and a more constructive regulatory outlook, especially in the United States.
The bullish momentum has pushed Bitcoin futures premiums, a key gauge of professional trader sentiment, to a five-week high. Traders now question whether this scenario will favor a rally to $72,000, despite uncertainty surrounding the U.S. presidential election and global socio-political turmoil.
President Biden’s election decision had limited impact on Bitcoin price.
President Biden’s decision to drop out of the race on July 21 has increased the odds that former President Donald Trump and crypto-friendly vice presidential candidate JD Vance will win the upcoming election. Vance has previously disclosed that he holds up to $250,000 in bitcoin and voted in favor of a joint resolution that would overturn rules that classify cryptocurrency holdings as liabilities on bank balance sheets.
Regardless of how crypto-friendly the Trump administration will be in 2025, investors also know that the Federal Reserve and the Securities and Exchange Commission (SEC) are independent. Federal Reserve Chairman Jerome Powell’s second term is set to end in May 2026, while current SEC Chairman Gary Gensler’s five-year term ends in April 2026.
Investors are confident the Fed will keep rates at 5.25% on July 31, but there has been a significant change in expectations for the year-end. The market now sees a 47% chance of two rate cuts by the December 18 meeting, up from 20.5% a month ago, according to the CME FedWatch tool, which uses a model for pricing U.S. Treasury yields.
The world’s second-largest economy, China, is also facing uncertainty as investors are frustrated by the government’s lack of short-term stimulus, Bloomberg reported. The People’s Bank of China cut its seven-day reverse repo rate on July 22 for the first time in 12 months, from 1.8% to 1.7%. Morgan Stanley economists called the move “reactive” and “risky” for growth estimates for the region.
Bitcoin derivatives suggest $72,000 is possible.
To understand how this situation has affected the risk appetite of Bitcoin investors, we need to analyze the premiums of BTC monthly futures contracts. The prices of these derivatives tend to differ significantly from those of regular spot Bitcoin exchanges, unlike perpetual futures (reverse swaps). Typically, a premium of 5% to 10% is expected to compensate for the longer settlement period.
The Bitcoin futures premium rose to 13% on July 22, the highest level in five weeks. Although lower than the 16% level on June 7, the current premium reflects cautiously optimistic sentiment, which is important to avoid chain liquidations in the event of unexpected negative price movements.
To see if this sentiment only exists in the futures market, we need to analyze the 25% delta skew of Bitcoin options, which measures the relative demand for call (buy) and put (sell) options. Negative skew indicates greater demand for call options, while neutral markets typically have a delta skew of -7% to +7%, indicating balanced prices between the two instruments.
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Bitcoin’s 25% delta skew indicator has been stable around -9% since July 19, suggesting that traders are somewhat bullish on the short-term price action. The last time Bitcoin options showed similar signs of confidence was on May 20, but that was short-lived as the $71,500 resistance proved difficult to overcome.
The latest data points to a healthy Bitcoin bull market targeting a retest of the $72,000 level. Demand is driven by several factors, including geopolitical uncertainty, confidence in less restrictive central bank economic policies, and a more constructive view on cryptocurrency regulation after the SEC dropped major cases and investigations.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.