The Bitcoin futures market is showing signs of bullish sentiment historically. Analysts are turning their attention to Bitcoin future basis– a measure that represents the difference between the Bitcoin futures price and the spot price.
Recent data has shown that this base has escalated to unprecedented levels since Bitcoin’s record high of $69,000 in November 2021.
Bullish Indications from Bitcoin Futures
Deribit’s Chief Commercial Officer, Luuk Strijers, has done that marked the current state of the Bitcoin futures base, which fluctuates between 18% and 25% annually, a rate reminiscent of 2021 market conditions.
According to Strijers’ commentary, this increased basis is not just a number, but a lucrative opportunity for derivatives traders.
By executing trades that buy Bitcoin on the spot market while simultaneously selling futures contracts at a premium, traders can secure a “dollar profit” that will occur at contract expiration, regardless of Bitcoin’s price volatility.
Strijers further noted that this strategy is particularly attractive in the current environment, fueled by the influx of new investments following the approval of Bitcoin ETFs and expectations surrounding Bitcoin’s halving.
The importance of the increased futures basis extends beyond the mechanics of derivatives trading. It further reflects broader market optimism, “bolstered” by recent regulatory approvals and macroeconomic factors impacting cryptocurrency.
The difference between Bitcoin’s spot and futures prices indicates a confident market outlook, driven by expectations of continued investment inflows and the impact of Bitcoin’s upcoming halving.
Such conditions create fertile ground for Bitcoin’s value to rise, as historical precedents have often associated bullish futures base rates with periods of significant price appreciation.
Market sentiment and halving cycles
Although Bitcoin’s current market performance is on a bearish trajectory, with a 3.9% dip taking the price to $68,203, market analysts advise against interpreting this as a negative signal. Rekt Capital, a respected figure in crypto analysis, views the recent price correction as a ‘positive adjustment’ ahead of Bitcoin’s highly anticipated halving in April.
Halving events, which reduce the block reward for miners, slowing the rate at which new Bitcoin comes into circulation, have traditionally catalyzed significant price increases due to the resulting supply constraints.
Rekt Capital’s analysis parallels current market movements and historical patterns observed in previous halving cycles.
According to the analyst, despite the rapid pace of these cycles, they exhibit a consistent sequence of a pre-halving rally followed by a retracement phase – both of which align with Bitcoin’s current trajectory. This cyclical perspective suggests that the recent dip is just a temporary setback, paving the way for the next bullish phase after the halving.
While there are signs that BTC is experiencing an accelerated cycle…
Nevertheless, history continues to repeat itself$BTC broke out in a “Pre-Halving Rally” right on schedule.
And now, #Bitcoin transitions to the “Pre-Halving Retrace” just in time.#Crypto https://t.co/Egqxs9ritl pic.twitter.com/lj0IdQtBEE
— Rekt Capital (@rektcapital) March 15, 2024
Featured image from Unsplash, chart from TradingView
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