Although Bitcoin’s (BTC) declined 26 percent after reaching $ 58,300 on February 20 creates some expectation for a decline in the market, the holding of digital currency to $ 43,000 reveals that this expectation is only psychological. This bearish move resulted in indicators such as the Crypto Fear & Ambition Index, which saw 38 points, to hit the lowest in the last five months.
While a drop of $ 15,400 seems unusual, there were six separate corrections during the 2017 bull market that even exceeded 25 percent. Moreover, when Bitcoin broke the record by reaching $ 42k on January 8, there was a 31.5 percent correction in the next two weeks that dropped BTC to $ 28,750.
While Bitcoin was trying to find a support level, its derivatives contracts destroyed all bullish signals and presented worrying data. Open positions in the futures market, for example, fell 22 percent after reaching an all-time high of $ 19.1 billion on February 21.
As seen above, the open positions of the BTC futures market declined by 22 percent, given the effect of the due date at the end of the month. Still, the remaining $ 14.9 billion open position represents a still 44 percent higher than the previous month’s data.
Bitcoin Price Index: How much is 1 Bitcoin in TL? (BTC TL)
Derivatives indicators point to a healthy market
By comparing the premium of futures contracts with the current spot levels, it can be understood whether professional traders are looking for a decline or an increase. Markets should show a slightly positive annual rate known as “contango”.
The premiums on one-month futures contracts have declined by 6 percent since February, which was anticipated excessive rise, but managed to hold above 1.2 percent. Annual premium, reaching 70 percent when it peaks, currently stands at 17 percent. Therefore, futures market data reveal that all over-indebted buyers have been eliminated, but we are not at all close to the bear market.
The 25 percent delta curve of the BTC options market compares neutral or bullish call options to put options waiting to fall.
The indicator, which acts as a kind of fear and ambition index in the options market, was at -5 percent until February 21, meaning upside protection was more expensive. The 25 percent delta curve came to neutral territory last week for the first time in almost five months.
This shows that market makers and top investors are not in despair, only the extremely positive expectations seen in January have disappeared.
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