Wednesday, May 22, 2024

A Bearish December for Bitcoin.

Besides recording a brief shoot-over, Bitcoin did not see much price movement in the month of December. The BTC price trajectory was entirely bearish. The current downtrend with resistance at $18,850 could push the Bitcoin price below $16,000 by mid-January.

At the time of writing this article, Bitcoin was trading at $16,555. The popular cryptocurrency was down by 0.05% in the last 24 hours as per data from CoinMarketCap. Investors expressed concerns that BTC could break below the current descending trend support at $16,100. A veteran crypto trader Th3 Cryptologist highlighted a descending wedge that could trigger a $14,000 low by February 2023.

Retail traders are avoiding quarterly futures but professional traders are taking to it to prevent the fluctuation of funding rates in a perpetual futures contract. Analysts expect the three-month futures annualized premium to trade between +4% to +8% in healthy markets to cover costs and associated risks. When the futures trade at a discount, it shows a lack of confidence from leverage buyers.

It should be noted that the lack of demand for leverage buying does not indicate that traders expect an immediate adverse price action. As such, one should analyze Bitcoin’s options markets to exclude externalities specific to the futures instrument. Options investors in bear markets give higher odds for a price dump prompting the skew indicator below -10%.

All for the test.

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