Bitcoin prices have faced challenges holding above the $95,000 mark since December 28, experiencing significant liquidations for bullish investors amounting to $470 million. However, demand for leveraged positions has weakened, indicating reduced bearish interest as Bitcoin tested levels below $92,000.
Open interest in Bitcoin futures, reflecting total contracts in the market, has decreased to the lowest point in two months. Although this suggests bears have a short-term advantage, the limited appetite for short positions hints at reduced downside risk for Bitcoin prices.
The Bitcoin futures market, where open interest peaked at 668,100 BTC on December 20, 2024, has seen an 11% reduction in positions to 595,700 BTC, marking a low not seen since November 4. Despite this, the futures premium—a measure of demand for leverage—remains above 10%, signaling strong bullish sentiment.
On December 28, the one-month BTC futures premium briefly went neutral at 9.5% but quickly climbed back above 10%, currently standing at 15%, the highest since December 20, 2024. This reflects confidence among bulls despite recent price pressures.
Comments from US Treasury Secretary Janet Yellen on potential federal debt ceiling challenges have renewed optimism among Bitcoin buyers. Her warning about the US debt limit, combined with financial standoffs in Congress, creates uncertainty that can discourage traditional market investments. For Bitcoin investors, however, these fiscal tensions and the rise in Bitcoin ETFs offer both challenges and opportunities.
The introduction of Bitcoin ETFs, now worth $105 billion, positions Bitcoin as a viable hedge against traditional fiscal risks. Also, perpetual futures contracts demonstrate retail traders’ risk appetite, with the market’s funding rate—a key indicator of this appetite—sitting at its highest in weeks at 1.3%, yet within typical ranges.
In summary, Bitcoin’s derivatives metrics such as futures premiums and funding rates have strengthened despite the drop in open interest. While this indicates sustained bullish sentiment, it also suggests that bears do not see significant profit potential in pushing Bitcoin’s price below the $95,000 threshold.
