Data highlights Bitcoin’s potential path to $40K amid global economic turbulence
Strong demand for leveraged long positions in Bitcoin (BTC) is evident from robust data on BTC derivatives.
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Bitcoin (BTC) has been trading in a narrow 4.5% range over the last two weeks, around the $34,700 mark. Despite the stagnant prices, there's been a 24.2% gain since October 7, instilling confidence, partly due to the 2024 halving and the potential approval of a spot Bitcoin exchange-traded fund (ETF) in the United States.
Some investors are concerned about the bearish global economic outlook, with indicators suggesting a global economic slowdown. This has led to a flight to safety, with investors seeking refuge in U.S. Treasurys, resulting in the 10-year note yield dropping to 4.55%, its lowest level in six weeks.
Surprisingly, the S&P 500 stock market index has reached its highest level in nearly seven weeks, defying expectations during a global economic slowdown. This can be attributed to the S&P 500 firms collectively holding $2.6 trillion in cash and equivalents, providing protection as interest rates remain high.
Meanwhile, Bitcoin's futures open interest has reached its highest level since April 2022, standing at $16.3 billion. This reflects healthy demand for Bitcoin options and futures, with investors focusing on potential bullish catalysts for 2024: the possibility of a spot BTC ETF and the Bitcoin halving.
One way to gauge market health is through the Bitcoin futures premium, which measures the difference between two-month futures contracts and the current spot price. The premium has reached its highest level in over a year, at 11%, indicating strong demand for Bitcoin futures, mainly driven by leveraged long positions.
Another piece of evidence comes from the Bitcoin options market, comparing the demand between call (buy) and put (sell) options. Over the past week, this indicator has averaged 0.60, showing a 40% bias favoring call options. Bitcoin options open interest has increased by 51% over the past 30 days, reaching $15.6 billion, with growth driven by bullish instruments.
In summary, despite Bitcoin's recent price surge and the global economic uncertainty, the derivatives market shows signs of healthy growth without excessive optimism, aligning with a bullish outlook targeting prices of $40,000 and higher by year-end.
