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After weeks of failing to break the tough resistance, Bitcoin (
$75,603.00 ) surged above $21,000. The few short hours it spent above $21,000 before a slight correction brought some much-needed confidence back into the market.
While it’s hard to estimate how long the correction will last, exchange data suggests that BTC is currently up against a much healthier market that might lead to another surge soon.
Data analyzed by CryptoSlate showed that there has been a significant decrease both in the number of futures contracts and their volume since the end of October. Spot volumes on exchanges have been on the rise, signaling a recovering retail buying pressure.
The ratio between Bitcoin ( $75,603.00 ) ’s spot and futures volume has reached its year-to-date high after a slight correction in mid-October, continuing the upward trend that began in July.
Graph showing the ratio between Bitcoin ( $75,603.00 ) ’s spot and futures volumes in 2022 (Source: The Block)
A deeper look at Bitcoin ( $75,603.00 ) derivatives reveals a much less volatile market. The Bitcoin ( $75,603.00 ) Futures Estimated Leverage Ratio (ELR) shows the proportion of open interest divided by the reserves of an exchange. Open interest is the total number of outstanding derivatives contracts. The Bitcoin ( $75,603.00 ) ELR shows the average leverage used by derivative traders and has historically been a solid indicator of market volatility — the higher the ratio, the bigger the liquidation risk for derivative traders.
After reaching an all-time high of 0.34 in October, ESL has dropped sharply and currently stands at 0.30.
Graph showing Bitcoin ( $75,603.00 ) ’s Futures Estimated Leverage Ratio (ESL) in 2022 (Source: Glassnode)
The stability caused by the derisking of the derivatives market has the potential to create a new resistance point for BTC at $21,000. Friday’s surge past $21,000 pushed Bitcoin ( $75,603.00 ) above its realized price of $21,092 for the third time this year.
Graph showing Bitcoin ( $75,603.00 ) ’s realized price in 2022 (Source: Glassnode)
Bitcoin ( $75,603.00 ) ’s realized price is a useful metric as it shows the realized market capitalization divided by the current supply — i.e. the average price at which all bitcoins in circulation were purchased. When BTC’s spot price rises above the realized price there’s a high likelihood that solid support will be formed.
Posted In: Bitcoin ( $75,603.00 ) , Price Watch
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