Bitcoin (BTC) rose 2.5% to $69,400 on June 3, raising hopes of regaining the $69,000 support level for the first time in 11 days. This positive price movement coincided with Bitcoin futures premiums surging to their highest level in seven weeks. But what does this mean about the sustainability of Bitcoin’s rise towards $70,000?
GameStop Mania and Federal Reserve Rate Cut Odds Lower
Some analysts believe Bitcoin’s recent price rally was partially influenced by GameStop’s (GME) impressive 36% rally. This surge in GameStop stock brought back memories of the anti-traditional financial sentiment of 2021, when retail investors banded together to challenge the status quo. This sentiment appears to have spread to the memecoin sector, with Floki up 16.5%, Dogwifhat (WIF) up 9%, and Bonk up 7.5%.
Additionally, comments from Minneapolis-based Federal Reserve Banker Neel Kashkari also added to uncertainty. Federal Reserve officials said they do not expect to cut interest rates anytime soon, citing Americans’ strong aversion to inflation. This stance is not universally shared among Fed officials but is seen as negative for housing and stock markets. As a result, some investors are turning to alternative investments such as Bitcoin.
Global geopolitical tensions have also influenced Bitcoin’s recent price movements. Australia’s decision to order Chinese investors to reduce their stakes in rare earth miners has heightened uncertainty in global markets. The move coincided with a 1% rise in gold and a selloff in U.S. Treasury bonds, with the five-year yield falling to 4.42% from 4.59% on May 31.
Bitcoin Derivatives Support Further Price Rise
Bitcoin futures premiums reflect the difference between the monthly contract derivatives market and spot levels on common exchanges. Typically, an annual premium (base) of 5% to 10% is incurred to compensate for the extended settlement. Essentially, higher premiums mean traders are willing to pay more for future contracts, which signals a bullish mood.
Bitcoin 3-month futures premium rose to 15%, hitting the highest level in 7 weeks. This signals a cautiously optimistic sentiment among traders, which is essential to avoid cascading liquidations in the event of unexpected negative price movements. Nonetheless, to infer whether this sentiment exists only in the futures market, we need to analyze the 25% delta skewness of Bitcoin options.
Delta skew measures the relative demand for bullish and bearish options. A negative skew indicates a high demand for call options (buy), while a positive skew indicates a preference for put options (sell). Neutral markets typically maintain a delta skew of -7% to +7%, indicating balanced pricing between call and put options.
Related: Could Bitcoin benefit from a European Central Bank (ECB) interest rate cut?
The 25% delta skew metric has remained stable around -3% over the past week, suggesting that traders are neither overly optimistic nor pessimistic about Bitcoin’s near-term price movements. The last time Bitcoin options showed signs of optimism was May 21, but this was short-lived as resistance at $71,500 was difficult to overcome.
Recent data points to a healthy Bitcoin market, driven by demand driven by a mix of factors including recession fears, geopolitical uncertainty, and a resurgence in anti-traditional financial sentiment. Key indicators such as Bitcoin futures premium and 25% delta skew suggest cautious optimism among traders, providing a stable base for further price gains above $70,000.
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.