Bitcoin hit a fresh high this morning as it topped $ 50,000 after crowding out excess bullish leverage in the derivatives market with a rapid drop in prices on Monday.
For a brief moment and during the first hours of trading in New York, Bitcoin topped $ 50,000 for the first time.
On Monday, Bitcoin values had fallen by $ 3,000 to below $ 45,926 in the first hours of trading in Asia, liquidating around $ 392 million in long positions in the derivatives market.
After a brief slump, Bitcoin topped $ 50,000 but was unable to hold that value. Now you need the help of cash or spot buyers to cross that mark, says Patrick Heusser, operations manager at Switzerland-based Crypto Finance AG.
“All of the people who work with derivatives have done their jobs and appear to be exhausted,” Heusser told CoinDesk, adding that Bitcoin values could consolidate between $ 44,000 and $ 50,000 if spot buyers don’t intervention.
Bitcoin’s recent rally of $ 40,000 was largely driven by derivatives leverage as spot market volumes cooled on institutional exchanges like Coinbase Pro, as discussed here on Monday.
In particular, the Coinbase premium indicator, which measures the spread between the BTC / USD pair from Coinbase Pro and the BTC / USDT pair from Binance, continues to show negative values, according to Ki Young Ju, CEO of blockchain analytics firm CryptoQuant. The negative premium indicates a weak institutional inflow.
In the retail sector, the derivatives market is on the rise. Bitcoin futures in March in particular have an annualized premium rate that currently averages 44.16%. This surpasses that of the Chicago Mercantile Exchange, which is run by institutions at an average of 24.39%, according to Arcane Research’s February 16 newsletter. Higher rewards indicate higher demand on a particular platform.
“Retailers are looking to increase this exposure and are pricing futures that expire in March at a premium of almost 5% above the spot price,” the bulletin said.