Bitcoin's recent dip to around $115,000 has sparked debate about the strength of this support level, particularly when analyzing data from Bitcoin derivatives markets. While some analysts maintain a bullish outlook, derivatives data suggests a more neutral or cautious sentiment among traders.
Derivatives Market Data
Bitcoin's price experienced a roughly 4% drop between Thursday and Friday, falling below $115,000 for the first time in two weeks. This correction occurred around the monthly derivatives expiry, which resulted in the wiping out of $390 million worth of futures contracts, equivalent to 14% of open interest. Examining Bitcoin futures and options indicators is important to understand if this event altered long-term expectations of traders.
Under normal circumstances, monthly Bitcoin futures typically trade at a 5% to 10% annualized premium over spot markets, which compensates for the longer settlement period. Currently, the premium is around 7%, which is within the neutral range and similar to the 8% level seen earlier in the week. This data initially suggests no major shift in investor sentiment despite the price drop.
Options Skew and Investor Sentiment
To further validate the neutral stance indicated by Bitcoin futures, it's important to assess the BTC options skew. The options skew measures the difference in price between calls (buy) and puts (sell) options. It provides insight into whether traders are more inclined to buy or sell Bitcoin at certain strike prices.
Whale Activity and Long-Term Conviction
Despite the short-term price fluctuations and liquidations, there are signs of strong long-term conviction among some investors. A "whale" placed a $23.7 million options trade on Deribit, betting that Bitcoin could reach $200,000 by the end of 2025. This bull call spread strategy, which involves buying call options at a lower strike price ($140,000) and selling call options at a higher strike price ($200,000), suggests a belief in new all-time highs. Such large trades by major players can influence market sentiment.
$115K as a Key Support Level
Analysts are closely monitoring the $115,000 level as a crucial support zone for Bitcoin. A daily close below this level could trigger further selling as short-term buyers exit their positions. If the $115,000 support fails, analysts anticipate a potential drop to $110,530, where stronger buying support is expected.
Daan Crypto Trades, an analyst, has indicated that for Bitcoin's uptrend to remain intact, the $115,000 range low needs to hold. A breakdown from this range could lead to a retest of $113,500, which could be a level to watch if that scenario unfolds.
Broader Market Factors
External economic factors and institutional activity also play a role in Bitcoin's price action. Stronger-than-expected US jobs data has diminished hopes for Federal Reserve rate cuts, impacting the crypto market. However, institutions such as Volcon, Inc. and The Smarter Web have recently purchased Bitcoin, taking advantage of the dip.
Overall, the Bitcoin derivatives data paints a mixed picture regarding the strength of the $115,000 support. While some indicators suggest a neutral sentiment, significant whale activity indicates long-term bullish conviction. The $115,000 level remains a key area to watch, as a break below it could lead to further downside.
