Bitcoin (BTC) has recovered some of its recent losses, climbing above $90,000 for the first time in nearly a week. This upward movement follows a period of selling pressure that lasted for over a month.
The broader recovery observed in risk assets, coupled with a decline in market volatility, has created an environment conducive for investors to drive prices higher. While the current rise is still limited, it has reignited discussions about the potential for reaching even higher levels in the market.
Digital assets are currently trading in correlation with stock markets, fueled by strengthening expectations that the Federal Reserve might resume interest rate cuts at its December meeting. Notably, BlackRock's US Bitcoin ETF has seen new inflows, breaking a recent streak of outflows. Despite liquidity remaining low in anticipation of the Thanksgiving holiday, falling volatility and indications of reduced forced selling have emboldened bulls to re-evaluate whether the recent decline has concluded.
Adam McCarthy, a research analyst at Kaiko, commented on the price movement, stating, "Liquidity is much lower right now, which means it takes a lot fewer transactions to move the price." He attributed the sharp move to the low liquidity during the holiday period.
Market Sentiment and Derivatives Data
The positive shift in sentiment is also observable in the derivatives markets. Data from Coinglass indicates an increasing demand for long positions in the Bitcoin futures market, which is a critical venue for leveraged trading. Open interest in these contracts remains at moderate levels. Furthermore, positive funding rates suggest a return of bullish pressure on these contracts, which had previously turned negative earlier in the week.
According to data from Deribit, a cryptocurrency exchange associated with Coinbase, call options with a strike price of $100,000 have reached their highest open interest on the options side. This development signifies a shift in market expectations, with bullish sentiment now dominating over the downside protection demand at $80,000 and $85,000 that characterized the market in the previous week.