Home Business News Bitcoin reaches more historical highs

Today, Bitcoin reached more historical highs at $73,654, after a series of record gains recorded about ten days ago.

This accelerating trend in Bitcoin may be worrying about the possibility of a very violent correction, as happened in late 2021 when it reached $69,000, after which it entered a deep downward trend that extended for years.

This may not seem to be the case with Bitcoin today with temporary corrections that can be quickly overcome and shoot to more record levels. But will this bull trend last long?

Futures are perhaps the most important keys to predicting the future path of Bitcoin. In finance theory, futures are the best we have at predicting future prices, or as known as the best unbiased predictor.

According to Deribit futures, we see that Bitcoin traders are targeting the $84,500 level by the end of next December, and the markets are also betting on it exceeding the $74,000 level at the end of this March.

The following chart shows Deribit futures prices from the end of March to the end of December, with the open interest and trading volume over the last 24 hours for each:


It is not only Bitcoin itself that has reached its highest historical levels, as bullish bets have pushed the premium of futures contracts over spot prices to more historical levels as well, especially for those with a settlement date in December, which recorded a historical premium yesterday of more than $11K after it was at almost at $5K at the beginning of the year, according to Deribit as well.

On the other hand, the medium and long-term forecasts are uncertain in the financial markets and cryptocurrency markets are the most severe. Also, long-term futures contracts usually do not have relatively high liquidity compared to front month or perpetual futures.

For example, the aforementioned December futures contracts have open positions of only about $172 million while perpetual futures have more than $900 million. Therefore, the prices of futures contracts with relatively low liquidity may be more susceptible to high market volatility than others. However, futures contracts, as we mentioned, may be one of the best ways to predict future prices.

It may also be useful to compare futures contract prices offered by other exchanges to get a clearer picture of the market’s expectations and bets.

The following chart illustrates the prices of Bitcoin June futures across some of the most prominent exchanges:


Markets appear to be optimistic about the possibility of Bitcoin continuing to record further gains after the halving event expected next April, while increasing flows into Bitcoin spot ETFs support this hypothesis. Total assets under management of BlackRock’s iShares Bitcoin Trust (IBIT) reached more than $14 billion just about a month after its launch.

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