Despite being stalled recently, derivative investors are betting on a further extension in Bitcoin.
Futures traders on the world’s leading crypto exchanges are leaning toward further price gains in the most prominent cryptocurrency.
BTCUSD – Daily Chart
The price of BTC sits at $22,630 after a recent pullback with support around the $21,000 level. The resistance level set for further gains in Bitcoin is now at $24,000.
Recent data from Bitcoin futures exchanges suggests that the BTC market is now in a state of contango, where the futures price of a commodity is higher than the current spot price. That happens when demand for futures contracts outweighs the current market price. That would imply that professional derivative traders expect the cost of an asset to increase soon.
Bitcoin’s rally in January surprised investors and analysts as it soared from around $16,000 to $24,000. That relieved some of the damage from the harsh bear market of 2022.
Bitcoin is now pulling back toward support with a 370-point loss setting up on Thursday.
The Bitcoin rally was driven mainly by a short squeeze in the futures markets as short traders got accustomed to the selling and were blown out by the heavy volatility.
Now that the market has settled down, the large-scale buying has stopped, and there is a lack of catalyst for a big rally, but the market can still head higher.
The critical threat to Bitcoin is in regulation which may come this year, and in mining firms that have been selling their holdings to fund their operating expenses as a wave of consolidation hits. Bitcoin is a trading opportunity, and there is an opportunity to play this current pivot level in BTC.
