Bitcoin derivatives have undergone a significant shift, indicating that the positive momentum witnessed in the past month has dissipated, while Bitcoin’s correlation with traditional markets has notably increased.
The price of Bitcoin has remained resilient above the $41,800 mark. However, on January 14, there was a moderate level of volatility as the price dropped to $41,690, experiencing a 3% decline on January 15.
What’s particularly interesting is that this is the sixth time in less than a month that the $41,800 support level has been tested. Traders are now questioning whether this recent movement is a sign of strength and what factors could potentially drive a rally above $44,000.
One possible factor that some analysts attribute to the 9.1% correction in BTC price on January 12 is Bitcoin miners’ outflows. CryptoQuant reported that nearly $1 billion worth of BTC was sent to exchanges, marking a six-year high.
Investors are concerned that the increased hash rate of Bitcoin, which has risen by 44% in the past six months, will compel miners to sell their coins at a faster pace, including their holding positions. CoinShares, a digital asset manager, predicts that the average cost to mine one BTC after the halving in April 2024 will surge to $37,800. CoinShares’ report covers 19% of the current Bitcoin mining hashing power and estimates that only five out of the 14 companies analyzed will remain profitable after the halving. This suggests that Bitcoin miners’ outflows to exchanges may continue.
The correlation between BTC and traditional assets such as gold and stocks has increased. Over the past month, Bitcoin’s 50-day correlation with gold has consistently been above 65%, while its correlation with the S&P 500 futures has been above 75% for the past three weeks. This indicates that macroeconomic factors have influenced both traditional assets and Bitcoin in a similar manner.
For example, Germany, the largest economy in Europe, recently announced a 0.1% contraction in its gross domestic product for 2023 compared to the previous year. Additionally, Germany’s economic ministry expressed concerns about a slow economic recovery. In the United States, inflation has become a major concern after the Consumer Price Index grew by 3.4% in November. These factors have led investors to believe that central banks may take longer than anticipated to reduce interest rates, causing them to favor fixed-income investments.
To determine whether Bitcoin investors have become bearish, it is important to analyze the BTC futures premium, also known as the basis rate. The data shows that the BTC futures premium has stabilized at 9%, which is below the neutral threshold. While it is not in bearish territory (which would require a premium below 5%), it suggests that Bitcoin investors are no longer expecting a short-term price increase.
The recent correction to $41,690 may have been triggered by BlackRock CEO Larry Fink’s comments on the spot ETF, calling it a “mere stepping stone to tokenization” of real-world assets, which could have a negative impact on Bitcoin’s price in the short term.
In conclusion, it is important to note that this article is for informational purposes only and should not be considered legal or investment advice. The author’s views and opinions expressed here do not necessarily reflect those of Cointelegraph.