Bitcoin (BTC) experienced a 2.5% increase on June 3, reaching $69,400. This has sparked hopes that it may reclaim the $69,000 support level for the first time in 11 days. Coinciding with this positive movement, the Bitcoin futures premium reached its highest level in seven weeks. But what does this mean for the sustainability of Bitcoin’s rally towards $70,000?
Some analysts believe that Bitcoin’s recent price jump was partly influenced by GameStop’s (GME) impressive 36% rally. This resurgence in GameStop stock reminded people of the anti-traditional finance sentiment seen earlier this year, when retail investors united to challenge the status quo. This sentiment seems to have spilled over into the memecoin sector, as Floki gained 16.5%, Dogwifhat (WIF) 9%, and Bonk rallied 7.5%.
Furthermore, comments from Neel Kashkari, a Federal Reserve Bank (Fed) official from Minneapolis, have added to the uncertainty. Kashkari stated that he does not anticipate a rate cut in the near future, citing Americans’ strong aversion to inflation. While not all Fed officials share this stance, it is viewed as negative for the housing and stock markets. As a result, some investors are turning to alternative investments like Bitcoin.
Global geopolitical tensions have also played a role in Bitcoin’s recent price action. Australia’s decision to reduce Chinese investors’ stakes in a rare earths miner has increased uncertainty in global markets. This move coincided with a 1% gain in gold and a sell-off in U.S. Treasuries, causing the 5-year yield to drop from 4.59% to 4.42% on May 31.
The Bitcoin futures premium reflects the difference between the monthly contracts in the derivatives markets and the spot level on regular exchanges. Typically, a 5% to 10% annualized premium occurs to compensate for the extended settlement. A higher premium indicates that traders are willing to pay more for future contracts, indicating bullish sentiment.
The Bitcoin 3-month futures premium has risen to 15%, reaching its highest level in seven weeks. This suggests a cautiously optimistic sentiment among traders, which is crucial to avoid cascading liquidations during unexpected negative price swings. To determine whether this sentiment is solely present in futures markets, one should also analyze the Bitcoin options 25% delta skew.
The delta skew measures the relative demand for bullish and bearish options. A negative skew indicates a higher demand for call options (buy), while a positive skew suggests a preference for put options (sell). Neutral markets typically hold a -7% to +7% delta skew, indicating a balanced pricing between call and put options.
It is worth noting that the 25% delta skew metric has remained stable near -3% over the past week, indicating that traders are not excessively optimistic or pessimistic about Bitcoin’s short-term price movement. The last time Bitcoin options showed signs of optimism was on May 21, but this was short-lived as the $71,500 resistance proved challenging to overcome.
The recent data suggests a healthy Bitcoin market, with demand driven by a combination of factors such as fear of recession, geopolitical uncertainty, and a resurgence of anti-traditional finance sentiment. Key metrics like the Bitcoin futures premium and the 25% delta skew indicate cautious optimism among traders, providing a stable foundation for further price gains above $70,000.
This article is for general information purposes only and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.