{"id":351865,"date":"2021-10-12T21:05:00","date_gmt":"2021-10-12T18:05:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/bitcoin-price-is-correcting-but-what-does-futures-data-show\/"},"modified":"2021-10-12T21:05:00","modified_gmt":"2021-10-12T18:05:00","slug":"bitcoin-price-is-correcting-but-what-does-futures-data-show","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/bitcoin-price-is-correcting-but-what-does-futures-data-show\/","title":{"rendered":"# Bitcoin price is correcting, but what does futures data show?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2d59974e48e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2d59974e48e\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/bitcoin-price-is-correcting-but-what-does-futures-data-show\/#The_futures_premium_shows_traders_are_slightly_bullish\" >The futures premium shows traders are slightly bullish<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/bitcoin-price-is-correcting-but-what-does-futures-data-show\/#Bitcoin_options_signal_%E2%80%9Cneutral%E2%80%9D_sentiment\" >Bitcoin options signal &#8220;neutral&#8221; sentiment<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Bitcoin price is correcting, but what does futures data show?  <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-128018ef>Bitcoin had been underperforming most altcoins for the past two months, but that trend reversed this week when (BTC&#8217;s) 20% rally pushed its market capitalization to break the $1 trillion mark on Oct. 6. That shifted investors&#8217; attention back to the leading cryptocurrency, and altcoins are currently in the red for the day.\u00a0<\/p>\n<p>The current positive momentum could be dangerous if Bitcoin traders become overconfident and abuse leverage to open long positions. To avoid this, traders need to carefully analyze derivatives markets to exclude this risk.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-10\/ef664f68-7cbe-4c49-add3-04e936a8e3e3.png\"><figcaption style=\"text-align: center;\"><em>Top 14 coins weekly performance. Source: CoinMarketCap<\/em><\/figcaption><\/figure>\n<p>Notice above how the altcoin market capitalization increased by 5.8% while Bitcoin posted a 20.8% gain in the same period. Sure enough, there were some outliers like Shiba Inu (SHIB) which rose by 200%, Fantom (FTM), which rallied 60%, and Klaytn (KLAY), which gained 36%. However, the aggregate market capitalization from altcoins did not accompany Bitcoin&#8217;s performance.<\/p>\n<p>Some well-known personalities, such as billionaire Wall Street investor Bill Miller recently expressed their optimism for Bitcoin while raising concerns on most altcoin projects. Miller explicitly mentioned the &#8220;big banks&#8221; getting involved and referred to &#8220;huge amounts&#8221; of venture capital money flowing into Bitcoin.<\/p>\n<p>The recent Bitcoin frenzy seems driven by the macro-economic scenario. The United States increased its debt limit by $480 billion to pay off its obligations until early December. The inflationary pressure brought by unending stimulus packages and meager interest rates has been fueling the long rally in commodities. <\/p>\n<p>For example, oil reached its highest level in seven years, and wheat futures recently hit a record high not seen since February 2013. Even the S&amp;P Case-Shiller home price index has presented an annualized 23.3% gain.<\/p>\n<p>To understand if Bitcoin traders got overly excited, traders should analyze Bitcoin&#8217;s derivatives indicators like the futures markets premium and options skew.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_futures_premium_shows_traders_are_slightly_bullish\"><\/span>The futures premium shows traders are slightly bullish<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The basis rate measures the difference between longer-term futures contracts and the current spot market levels. This indicator is also frequently referred to as the futures premium.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-10\/89b4a497-4082-4c43-9375-89a9a1e58421.png\"><figcaption style=\"text-align: center;\"><em>Bitcoin 3-month futures annualized basis. Source: Laevitas.ch<\/em><\/figcaption><\/figure>\n<p>A 5% to 15% annualized premium is expected in healthy markets, which is a situation known as contango. This price difference is caused by sellers demanding more money to withhold settlement longer.<\/p>\n<p>The recent 20% Bitcoin price rally caused the indicator to reach the upper limit of this neutral zone, meaning investors are bullish but not yet overconfident. Whenever buyers demand excessive leverage, the basis rate can easily surpass 25%, as seen in mid-May.<\/p>\n<p>To exclude externalities specific to the futures instrument, one should also analyze options markets.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Bitcoin_options_signal_%E2%80%9Cneutral%E2%80%9D_sentiment\"><\/span>Bitcoin options signal &#8220;neutral&#8221; sentiment <span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The 25% delta skew compares similar call (buy) and put (sell) options. This metric will turn positive whenever &#8220;fear&#8221; is prevalent because traders expect potential downside.<\/p>\n<p>The opposite holds when option traders are bullish, causing the 25% delta skew indicator to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-10\/40bfde0e-cce6-4e09-a1fc-e2e7c8a200a8.png\"><figcaption style=\"text-align: center;\"><em>Deribit BTC options 25% delta skew. Source: Laevitas<\/em><\/figcaption><\/figure>\n<p>The above chart shows that there hasn&#8217;t been a single instance of options traders becoming overconfident in the past six months, which would signal &#8220;greed&#8221; because the 25% delta skew dropped below negative 8%. Meanwhile, the indicator has ranged near 0 for the past week, showing balanced risks between the bears and bulls.<\/p>\n<p>Those findings necessarily show a lack of confidence from buyers, but it is quite the opposite. Had Bitcoin bulls already been overly confident at $57,000, there would be little room for additional leverage, increasing the risk of a cascading liquidation if a momentary price correction occurred.<\/p>\n<p>Bulls are modestly confident and even a 20% price correction is unlikely to change the situation because the futures market&#8217;s basis rate shows a reasonable premium after the recent rally.<\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>author<\/em><\/a><em> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/bitcoin-price-is-correcting-but-what-does-futures-data-show\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Bitcoin price is correcting, but what does futures data show? &#8221; Bitcoin had been underperforming most altcoins for the past two months, but that trend reversed this week when (BTC&#8217;s) 20% rally pushed its market capitalization to break the $1 trillion mark on Oct. 6. That shifted investors&#8217; attention back to the leading cryptocurrency,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":351866,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvOWNlNDE4NjAtYWY1ZC00MmY0LWE4OWEtOTk5OWU5Y2Y3YjM5LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,74972,81209,74937,74863,74860,75012,74939,70551,73785],"class_list":["post-351865","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-bitcoin-futures","tag-bitcoin-options","tag-bitcoin-price","tag-cryptocurrencies","tag-cryptocurrency-exchange","tag-derivatives","tag-market-analysis","tag-inflation","tag-markets"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/351865","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=351865"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/351865\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/351866"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=351865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=351865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=351865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}