The price of Bitcoin (BTC) dropped 5.5% from Sept. 3 to Sept. 5, reaching a low of $55,860. This decline from $59,090 led to a modest $58 million in liquidated leveraged long futures, suggesting that bulls were not caught off guard. Despite this price weakness, Bitcoin derivatives signal resilience, indicating that traders are neither using excessive leverage nor displaying overconfidence.
Is the Bitcoin bull market over?
Some analysts argue that Bitcoin’s 2024 bull run has officially ended, citing the $73,757 all-time high that occurred almost six months ago. On the other hand, some traders view the 30% pullback during this period as typical market behavior.
Regardless of market sentiment, historical BTC price rallies following previous halving cycles typically took five to six months to materialize. Additionally, uncertainty surrounding the upcoming US presidential election and shifts in US central bank monetary policy add to the current market volatility.
Source: Armando Pantoja
Crypto and blockchain tech educator Armando Pantoja notes that Bitcoin tends to start rallying around 10 months after an increase in the monetary supply. In this instance, the US M2 began expanding in February 2024, suggesting that the added liquidity could influence Bitcoin’s price by December if past trends hold true.
However, regardless of whether historical patterns repeat, Bitcoin traders appear less reactive to price corrections, as indicated by derivatives metrics. For example, before the Aug. 5 crash, traders were overly optimistic about Bitcoin’s price based on futures market data. As a result, the subsequent drop below $55,000 led to a chain of liquidations down to $50,000.
Bitcoin 2-month futures annualized premium. Source: Laevitas.ch
Currently, the Bitcoin futures premium is at 6%, approaching the lower boundary of the neutral range, which spans from 5% to 10%. During periods of heightened excitement, the excessive demand for leveraged longs can push these monthly contracts to trade at a premium of 10% or higher compared to regular BTC spot markets. More importantly, the indicator has remained unchanged from the…
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