There is a belief that Bitcoin’s price movement is based solely on the changes observed through spot trading. However, the truth perhaps is that the derivatives market also has a huge impact on the price movement of the king coin. After the recent rally, it is all the more necessary to take a look at the current state of Bitcoin derivatives.
Bitcoin calls for a price increase?
Indeed they do. The calls contracts in a Bitcoin derivatives market are associated with a request for a price increase. Puts, on the other hand, are contracts where people hedge against falling prices. Of course, with such price increases, calls contracts seem to dominate the market.
At the time of writing, the put / call ratio had fallen to an eight-month low. The last time this ratio was this low was in December 2020. Low values of the put / call ratio are an indication that investors are aiming for a price increase. In fact, at press time, demand appeared to be much higher than it was in April, just before BTC soared to $ 60,000.
In addition, Bitcoin Options OI by Strike showed that there are significantly more contracts for calls than for puts. Specifically in the $ 45,000 to $ 55,000 range. At the time of publication, BTC was trading at $ 41,719 and was already approaching $ 42,000. Ergo, the lower levels of the above range could be attainable for Bitcoin by the end of August if its northward movement continues.
What do Bitcoin’s futures dictate?
Despite declining daily volumes, futures open interest appeared to be taking a new step. With the exception of the spike seen on July 25, BTC OI was at a 75-day high at press time. This is more than a sign, especially since a higher OI would attract more market participants. This could also help keep the bull rally on the charts.
Finally, the probability index, which underlined the likelihood of Bitcoin reaching certain price levels, was very cheap for the $ 42,000 to $ 55,000 range. According to the indicator, there is a 37% chance that BTC will hit $ 44,000, 33% for $ 45,000, 30% for $ 46,000. Additionally, there is a 28.3% combined chance that the king coin will trade between $ 50,000 and $ 55,000.
That means there are plenty of people out there who are campaigning for Bitcoin to break the $ 44,000 resistance and soon recover.
So if these levels are successfully achieved, Bitcoin investors could see some good times in the future.