The recent 24.3% rally in Bitcoin’s price has caused discomfort for investors using Bitcoin derivatives, and many are questioning whether Bitcoin has the strength to trade above the $30,000 resistance. However, two key Bitcoin price metrics suggest that bulls will be able to hold the $30,000 level as support.
Firstly, BTC futures contracts in healthy markets should trade at a 5% to 10% annualized premium known as contango, which is not unique to crypto markets.
Secondly, the 25% delta skew metric, which indicates when arbitrage desks and market makers overcharge for upside or downside protection, did a complete turnaround as it exited the “fear” mode and culminated with moderate “greed” sentiment at a negative 8% skew. The absence of excessive optimism is a good sign, and there is no apparent driver to justify a sharp correction.
Overall, a certain amount of skepticism is healthy for buyers using derivatives contracts, and the lack of excitement among Bitcoin derivatives traders is possibly due to uncertainty around the crypto regulatory environment and the growing risks of an economic recession.