Bitcoin Finds Balance Around $95,000

The crypto market shows encouraging signs as open interest in bitcoin hits its lowest level in two months, suggesting a decrease in selling pressure. This development occurs in a context where BTC has been fluctuating around $95,000 since late December 2024.

Bearish traders retreat in the face of BTC’s resilience

On December 28, 2024, the bitcoin market experienced a series of massive liquidations totaling $470 million, primarily from long positions.

Open interest on futures contracts dropped by 11% since its peak on December 20, falling from 668,100 BTC to 595,700 BTC. Paradoxically, this decrease in bearish trader activity suggests limited confidence in their ability to push prices lower.

The futures contracts premium reflects this dynamic, with a rapid rebound above 10% after briefly touching 9.5% at the end of December. More revealingly, this premium is now at 15%, its highest level since December 20, signaling renewed confidence from bullish investors.

The funding rate for perpetual futures contracts, a key indicator of retail trader sentiment, remains at 1.3% monthly, its highest level in over two weeks, while still remaining in a zone considered neutral.

The American budget impasse strengthens Bitcoin’s appeal as a safe haven

Janet Yellen’s warning regarding the ceiling of the U.S. debt, which could be reached as early as January 14, paradoxically creates a favorable context for bitcoin. The political deadlock surrounding the increase in the debt ceiling, exacerbated by the opposition from some Republicans, enhances the appeal of bitcoin as a safe haven.

The growing presence of Bitcoin ETFs, now representing $105 billion in assets under management, contributes to establishing crypto as a credible alternative to traditional assets during periods of economic uncertainty. This institutionalization of the market brings increased stability, despite short-term volatility.

In conclusion, the current market configuration, characterized by a disengagement of bearish positions below $95,000 and encouraging technical indicators, suggests bullish potential for bitcoin. U.S. political uncertainty could paradoxically strengthen its status as a safe-haven asset.