Bitcoin futures data aligns with BTC traders’ hope for new all-time highs

Key takeaways:

• Bitcoin buying in the spot and futures markets helped BTC price keep its upward momentum despite $170 million in margin liquidations.

• Weak stablecoin demand in China and the limited use of futures leverage suggest Bitcoin’s current rally is sustainable.

Bitcoin (BTC) price has displayed strength at the $102,000 support level on May 19, following the $170 million in liquidations of leveraged positions. The abrupt $5,000 correction after hitting $107,090 may have been unexpected, but it does not mean the odds of reaching an all-time high in the near term are lower, especially since Bitcoin derivatives metrics have shown resilience.

The annualized one-month futures premium for Bitcoin remained close to 6% despite the retest of $102,000 support. This current level is within the 5% to 10% neutral range, which has been the norm over the past week. While at first glance such data might suggest a lack of optimism, at the same time, it proves that the buying pressure is coming from the spot market rather than from leveraged bets.

Some analysts attribute Bitcoin’s correction to comments by Japan’s Prime Minister Shigeru Ishiba on the country’s fiscal situation being “undoubtedly extremely poor,” as reported by Bloomberg. 

Yields on Japan’s long-term government bonds soared to their highest level ever on May 19 as traders demanded higher returns, signaling a lack of trust. Japan is the largest holder of US Treasury bonds, so investors are concerned about contagion risks at a delicate moment for the global economy, especially as the ongoing trade war has severely limited growth prospects.

The fact that Moody’s rating agency cut the US government’s long-term credit rating to AA1 from AAA has also played a significant role in limiting Bitcoin’s upside, particularly as its correlation with the S&P 500 index has stayed above 80% since early May. Investor sentiment could quickly deteriorate as the impact of tariffs becomes partially visible in second-quarter corporate earnings.

To understand if Bitcoin has what it takes to reach an all-time high in the near term, one should analyze the demand for stablecoins in China. Periods of excessive optimism usually lead to stablecoins trading above fair value, which is not a healthy indicator, as Bitcoin jumps above $105,000.

USD Tether (USDT) has been trading at a slight 0.4% discount in China, meaning Bitcoin’s price increase has likely not been driven by FOMO. The absence of excessive leverage on Bitcoin futures and the lack of desperate inflows into Chinese markets are key ingredients for sustainable price gains, paving the way for a more solid bullish momentum above $105,000.

Bitcoin’s price displayed significant resilience after the announcement of a class-action lawsuit against Strategy’s top executives, claiming “false and/or misleading statements” regarding risks associated with Bitcoin’s investment. The complaint specifically mentions unrealized losses, although those events do not affect the company’s cash flow.

Regardless of whether the case has foundation, negative headlines tend to have a much stronger and longer price impact in neutral to bearish markets, which clearly was not the case as Strategy (MSTR) shares traded up 2.4% on May 19. 

Additionally, the fact that the $102,000 support held amid increased global economic uncertainty, combined with strong spot buying and resilient derivatives metrics, provides every indication that Bitcoin is well-positioned for further price gains.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.