Bitcoin (BTC) soared 9.7% from October 27th to October 29th, reaching a high of $73,575, before paring the gains and retesting the $71,500 level on October 30th. Despite Bitcoin's price correction, several indicators, such as derivatives market activity and on-chain indicators, fell. , and demand for the stablecoin suggests a solid foundation for a sustained rally above $73,000 in the near term.
However, Bitcoin futures premiums, a key measure of leverage demand, show strong confidence among bullish investors.
Bitcoin 2 month futures premium. Source: laevitas.ch
In neutral market conditions, monthly futures contracts typically carry a 5% to 10% annual premium to account for the longer settlement period. The 13% premium is currently at a four-month high and shows no obvious weakness despite Bitcoin's rejection at $73,575.
Bitcoin prices roughly tracked gold, initially soaring to an all-time high of $2,790 on October 30, but then losing momentum.
Gold/USD (left) vs. BTC/USD (right). Source: TradingView
Gold's decline was partially due to recent macroeconomic data released on October 30, including US private payrolls data that showed payrolls increased by 233,000 in October. There is a possibility. Additionally, the U.S. Bureau of Economic Analysis reported third-quarter GDP growth of 2.8%, slightly lower than the previous quarter's 3% growth.
This economic resilience reduces the likelihood of further aggressive interest rate cuts by the Federal Reserve, reducing near-term demand for alternative assets such as gold and Bitcoin.
Furthermore, a strong economy does not necessarily mean that demand for U.S. government bonds will increase. Five-year U.S. Treasury yields rose from 3.5% to 4.1% in the past month as the cost of refinancing government debt rose amid concerns about the budget deficit.
Bitcoin on-chain and derivatives indicators show optimism
Bitcoin’s resilience amid short-term price declines is not surprising, given continued skepticism about the outcome of US macroeconomic policy. Still, in terms of net foreign exchange flows, there was a sizable wave of deposits when Bitcoin price crossed $70,000 on October 29th, indicating some traders' willingness to take profits at this level.
6-hour average net transfer amount, exchange BTC. Source: Glassnode
However, data from Glassnode shows that this trend reversed by October 30, with net outflows now predominant. Some traders initially sold Bitcoin near all-time highs, but the move was short-lived and within normal trading expectations.
To confirm the sentiment, demand for stablecoins in the Chinese market provides further insight. Strong demand for cryptocurrencies tends to drive stablecoin prices up to a 2% premium against the US dollar, but discounts often signal fear as traders exit the cryptocurrency market.
Related: Bitcoin “Trump Hedge” Rally Lacks Macro Conditions for All-Time High
USDT Tether (USDT/CNY) vs. USD/CNY. Source: OKX
According to the data, the premium for Chinese stablecoins has fallen slightly from 0.7% to 0.3%, remaining within the neutral range. Despite Bitcoin's $2,140 correction on October 30th, this data shows the resilience of the market. Furthermore, when combined with on-chain and derivative indicators, there is ample evidence to suggest that traders remain confident in Bitcoin's chances of maintaining its bullish momentum in the short term.
This article is for general informational purposes only and is not intended to be, and should not be taken as, legal or investment advice. The views, ideas, and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
