Bitcoin derivatives hint at a potential jump above $73K
By ForGeeks Bitcoin derivatives data points to the possibility of additional price gains in the coming weeks as the chances of Ethereum ETF approval in the U.S. keep rising.
Bitcoin derivatives data points to the possibility of additional price gains in the coming weeks as the chances of Ethereum ETF approval in the U.S. keep rising.
Bitcoin experienced a significant surge, gaining 8.5% in 24 hours to reach $71,926 on May 21. Thus, bitcoin is just 2.5% closer to its all-time high. Moreover, BTC derivatives are showing favorable conditions to reach new all-time highs in the coming weeks.
The 4% daily jump in the price of BTC appears to be driven by growing optimism about the chances of U.S. Ethereum exchange-traded fund (ETF) approval and the general trend of the market seeking inflation protection. The trend also drove gold and the S&P 500 to new all-time highs on May 20.
The trend also took gold and the S&P 500 to new all-time highs.
Many traders are wondering if the recent rise in bitcoin prices was caused by the overuse of long leveraged positions and what the implications of spot ETH are.
The regulator’s stance has changed after the U.S. Senate decision was overturned
Bloberg senior ETF analyst Eric Balchunas raised the odds of Ethereum spot ETF approval from 25% to 75% on May 20, influenced by political pressure. The adjustment follows a crucial May 16 decision by the U.S. Senate that repealed SEC Bulletin 121, which imposed strict capital requirements on banks holding customers’ digital assets.
At the same time, the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC) has issued a new version of its own version of the Ethereum spot ETF, which was approved by the U.S. Senate on May 16.
Before the Senate vote, President Biden said he could use executive power to veto any resolution that would override SEC policy. But the Senate’s decision in favor of embracing cryptocurrencies has forced the White House to reassess strategically, says Perianne Boring, founder and CEO of Blockchain Trade Association Digital Chamber. SEC Chairman Gary Gensler has previously shown considerable reluctance to classify Ethereum as a non-security or hint at the likelihood of approving its dot-com ETF.
Securities and Exchange Commission Chairman Gary Gensler has previously shown considerable reluctance to classify Ethereum as a non-security or hint at the likelihood of approving its dot-com ETF.
On May 20, however, things changed dramatically when the SEC reportedly requested updates on Ethereum spot ETFs from exchanges such as the NYSE and Nasdaq. Despite the potential competition from Ethereum, the emergence of its spot ETF is likely to be generally favorable to the cryptocurrency sector, creating a more favorable environment for investment.
At the same time, the SEC is likely to be concerned about the potential competition from Ethereum’s spot ETFs, creating a more favorable investment environment.
The relaxed anti-cryptocurrency stance of regulators in the U.S. may encourage more investment managers, including pension funds, to take a more favorable view of the sector. Historically, regulatory uncertainty, whether for mining operations or privacy-oriented intermediaries, has had a negative impact on the price of bitcoin.
Historically, regulatory uncertainty, whether for mining operations or privacy-oriented intermediaries, has had a negative impact on the price of bitcoin.
Bitcoin derivatives are moderately bullish
The rise in bitcoin’s value on May 21 also sparked increased demand for long BTC positions via monthly futures. Under typical market conditions, these derivatives command a 5% to 10% premium to the spot price to compensate for the extended settlement time.
And these derivatives are trading at a 5% to 10% premium to the spot price to compensate for the extended settlement timeframe.
Data shows that the premium on BTC futures rose to 14%, the highest in five weeks. This is indicative of moderate bullish sentiment, in sharp contrast to April 1, when the futures premium reached 25% — a level usually indicative of extreme market optimism.
Studying the options market provides a better understanding of the dynamics of the market. A 25% delta skew helps gauge the impact of leverage on recent price trends. A market encouraged by rising prices typically exhibits a skew of -7% as put (sell) options become cheaper.
