The last few weeks have been dominated within the crypto market by the news generated around the price of Bitcoin. And it is that, after several years during which the cryptocurrency generally remained below $ 10,000 per BTC. Finally the virtual currency entered its biggest bullish rally so far. So when the market seems to have calmed down, we explain what factors make a rise in the price of Bitcoin likely.
The market for futures contracts
The first element that allows us to predict that the bullish rally of Bitcoin has not come to an end, is the situation in the market for perpetual future contracts on Bitcoin. And it is that, in this market, exchanges charge commissions, normally every eight hours, as a method to guarantee that there are no problems in the balance of the exchange platform.
These commissions vary according to the supply and demand situation of these perpetual future contracts on Bitcoin. If there is a strong demand for them, the commission is positive and is charged to buyers. Whereas if there is pressure from the supply side, the fee is charged to the contract holder.
Thus, the commissions currently existing in this market around 2% are an extremely positive signal for BTC. Showing that investors in this type of product are looking to acquire long-term future contracts, thus relying on the performance of the BTC price.
Institutional Investor Interest in Bitcoin
One of the fundamental factors behind the rise in the price of Bitcoin is the growing interest on the part of institutional investors in the cryptocurrency. Thus, throughout the year millions of dollars of institutional investment funds have been poured into the crypto market.
And now, when the price of the cryptocurrency seems to have stagnated on the verge of reaching $ 20,000 per BTC. The interest of institutional investors does not seem to be backing down. On the contrary, the main company that serves as an intermediary between institutional investors and the market, Grayscale, continues to acquire Bitcoin aggressively.
Thus, in the last week alone, Grayscale added 14,050 Bitcoins to its cryptocurrency balance, bringing it to a total of 561,130 BTC, equivalent to 10.7 billion dollars. A true record in the interest of institutional investors in BTC, and a clear indicator of the uptrend that still exists in the market.
The price of future contracts on Bitcoin
On the other hand, another indicator that allows us to know the trend of the price of Bitcoin is the market for future contracts on Bitcoin. These, unlike perpetual futures contracts, do have a pre-established expiration date.
Thus, by looking at the price at which these contracts are traded, we can get an idea of where investors consider BTC to go. Knowing that if the spread between these futures contracts and the spot market is very high, the upward trend in the price of Bitcoin is strong.
A difference of 1.5% is considered normal, while anything below it is considered very pessimistic. Currently the market for BTC futures contracts works with a differential of 4% compared to the spot market. A sign of extreme optimism among investors.
The put / call ratio situation
Finally, the last element that makes us foresee an upward trend in the price of Bitcoin, is the situation of the put / call ratio. It measures the proportion of purchase options (call) and sale options (put) in the market. If this ratio favors call options, it is known that the market has a strong upward trend.
And in the case of Bitcoin today, the put / call ratio stands at 0.64, below the peak reached on December 2 when it stood at 0.70, but still quite bullish. Showing the chances that an increase in the price of BTC is yet to come.