$1.64 billion in Bitcoin futures contracts were liquidated, but market sentiment remains positive

Today, Bitcoin suddenly dropped by $11,500, liquidating more than $1.64 billion worth of Bitcoin futures contracts, accounting for 8.5% of the $19.5 billion open interest. However, investors' optimistic expectations for Bitcoin have not been shaken.

As shown in the above chart, negative price fluctuations and a decrease in Bitcoin futures open interest will not affect Bitcoin's long-term growth. Between January 19 and 23, the indicator fell by 20%, but it took only two weeks to recover to the $13 billion level.

The contango remains stable, indicating a healthy market. By measuring the premium of futures contracts relative to current spot levels, one can infer whether professional traders are bullish or bearish. Typically, the market is slightly up on an annualized basis, a situation known as "contango."

The 25% incremental bias in the options market suggests that the market remains bullish.

The 25% delta deviation, an indicator of fear and greed among option traders, is currently at -6%, meaning it is more expensive to protect upside. This further suggests that market makers and top traders remain bullish.

Today’s price action may come as a surprise to new market participants, but Bitcoin prices previously plunged $11,200 between January 10 and 11. Considering Bitcoin’s six-day volatility is 5.1%, these wild swings are not out of the ordinary.

The sharp rise in the crypto market in the past two weeks was driven by news that Tesla purchased $1.5 billion worth of Bitcoin and other institutions continued to buy Bitcoin. Now the impact of this news is weakening, and the market is adjusting back to the normal trend line.

Image source: Bybt.com, NYDIG, Laevitas

byAmy Liu