Bitcoin price is currently over $51,000 with just a few hours left until the daily candle closes. There are no constant rises or falls in crypto, and the weekend is nearly upon us. Could the expected decrease in volume on Saturday and Sunday be a good time frame for a downturn? A better understanding of the recent surge could help us interpret the short-term expectations for a decline.
Bitcoin Price Surge
Bitcoin price is trying to find support at $52,000, but the price is very volatile. Between February 7-15, the Bitcoin price increased by 21.2%, and this week’s rise is associated with spot Bitcoin ETFs. However, we see that professional investors in the derivatives markets are not fully convinced by the Bitcoin surge.
In just 7 days, spot Bitcoin ETFs saw a net inflow of $2.4 billion. Data indicating a slowdown in the US economy also supported the rise despite higher than expected inflation. According to the Census Bureau, US retail sales declined by 0.8% in January compared to the previous month. Similarly, Japan and the United Kingdom entered a technical recession with GDP falling.
Derivatives Data
Coinglass data shows that the 8-hour average funding rate remained relatively stable at 0.25% over the past week, indicating a neutral market and suggesting that the bullish sentiment in leveraged trades is not as strong as in spot markets, with BTC price appearing inflated. At the end of 2023, this rate reached 1% over 7 days, reflecting excessive demand.
We had mentioned that belief in ETF approval during those days drove derivative traders to take positions for substantial profits. The increase in spot price was also supported by this demand.
On the other hand, activity in Bitcoin options has remained relatively stable over the last two weeks, with the put-call volume ratio averaging 0.60. This means that the demand for put (sell) options is 40% lower, which is moderately supportive for the current BTC price level.
For now, the tepid demand in derivative markets points to a downturn, while the stagnation in options balances it out.
What Will Be the Outcome?
The funding rate suggests that professional investors are expecting a correction in the price that has risen by 20% very quickly. We had previously mentioned that long-term investors had started taking profits. And whether the inflows into Spot Bitcoin ETFs will slow down significantly at some point will affect the fundamental buying motivation. In this context, it could be beneficial for investors to monitor ETF inflows without overlooking the possibility of a correction against the rapidly rising price.
For now, it is difficult to be certain of a downturn without seeing closures below $51,000 for Bitcoin price. However, a continuation of the parabolic rally also requires closures above $51,800. Likely, the decisive moment will come after this weekly close.
