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Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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Derivative Traders Bet On Bitcoin Rally Continuation

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

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.

Last Updated: 10/02/2023

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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