Traders expect Bitcoin (BTC) to return to support near $40,000 soon, but derivatives analytics suggest a different scenario.
According to reports, the daily price chart for Bitcoin (BTC) appears to be in a steady recovery trend, but there are some troubling clues coming from derivatives markets.
The futures and options markets are currently exhibiting a lack of trust from Bitcoin expert traders, but the data has a good spin.
The path to $40,000 is uncomfortably predictable, and cryptocurrency traders commonly refer to such price swings as manipulation.
Investors should study derivatives markets to understand how whales, market makers, and arbitrage desks are positioned, regardless of the rationale for Bitcoin's price rebound.
While perpetual contracts are popular among retail traders, professional traders prefer fixed-calendar futures and options. These derivatives enable more intricate methods despite being more difficult to trade.
The liquidations are over, but the path to $69,000 isn't
There hasn't been a meaningful futures contract liquidation since January 23, according to data. Because derivatives exchanges must sell those futures at market prices, when leverage long positions are terminated, the price correction accelerates.
On January 23, the previous large forced long position termination was $290 million. This helps to understand why Bitcoin's rebound has been relatively calm in recent weeks.
Even said, considering that Bitcoin is now trading 44% below its all-time high of $69,000, the market is far from dead.