Bitcoin’s (BTC) price momentum has cooled since the Oct. 29 rally toward the all-time high, but the derivatives market continues to project traders’ optimism in a price recovery.
The analysis of Bitcoin futures and options markets suggests that traders are maintaining positions without excessive leverage, which is crucial for a sustainable push toward new all-time highs. However, understanding the trigger for Bitcoin’s price drop to below $69,000 on Nov. 1 remains essential.
Bitcoin 1-month options delta skew, put-call. Source: Laevitas.ch
When there’s an elevated expectation of a Bitcoin price decline, the 25% delta skew metric typically trends above 7%, indicating that put (sell) options are priced at a premium due to increased demand.
Bitcoin derivatives look stable despite the BTC price pullback
To assess whether Bitcoin traders’ sentiment has weakened after the recent downturn, it is useful to analyze the funding rate of perpetual contracts (inverse swaps). A neutral funding rate, without a cost for bullish leverage, suggests a lack of strong conviction, while rates exceeding 2.1% per month signal excessive optimism.
Bitcoin perpetual futures 8-hour funding rate. Source: Coinglass
On Nov. 1, there was no significant impact on leverage demand, with the rate at 0.01% every 8 hours, or approximately 0.9% per month—generally viewed as neutral.
There is no indication that leverage has been the primary driver behind Bitcoin’s rally from $67,000 to $73,500 between Oct. 27 and Oct. 29, suggesting a healthy market trend. Overall, Bitcoin derivatives markets support a sustained bull market, potentially opening the path for further gains.
Related: ‘Uptober’ sees 11% Bitcoin price spike as traders ponder ‘nuclear’ rally
Multiple factors impact investor sentiment
From a trading standpoint, securing profits before major political and economic Bitcoin’s recovery to $71,000 on Nov. 1 can be closely correlated with movements in the S&P 500 index, suggesting that both markets are reacting to similar macroeconomic indicators.
S&P 500 futures (left) vs. Bitcoin/USD (right). Source: TradingView
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