Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.

Editor's Note: This article comes from

Chain reference (ID: lianneican)

Chain reference (ID: lianneican)

, Author: Internal Reference Jun, reprinted by Odaily with authorization.

When bitcoin tested a low of $17,580 on Dec. 11, investors remained relatively calm despite some analysts issuing bearish forecasts. In the past two days, the price of Bitcoin has returned to above $19,000, which also shows that the fundamentals of Bitcoin have become healthier.

Over the past week, Bitcoin market dominance has continued its upward trend, rising from 63.5% to 64.5%. The move was likely spurred by the $100 million acquisition of MassMutual Insurance and the $650 million bond sale of MicroStrategy.

The news appeared to give further confidence to investors who thought a retest of $20,000 was possible.

While digital currencies showed an overall decline last week, bitcoin outperformed the top 15 altcoins. The latter has fallen by an average of 2.5% over the past week. However, overall volumes were disappointing compared to the previous month. The indicator partially invalidated the recent low of $17,580 as it signaled a lack of confidence.

On the other hand, recent data also shows a lack of trading interest at the current level of $19,100.

Institutional investors choose to buy BTC during the sideways market

Crypto fund manager Grayscale Investments is still actively adding BTC to their portfolio, valued at over $10.7 billion.

Over the past week, Grayscale has accumulated 14,050 BTC for a total of 561,130 BTC. So, it's been another bumper week for the Grayscale Bitcoin Trust. A similar level of excitement can be seen by analyzing the fund's premium over each effective BTC held, which currently stands at 0.00095116 BTC.

As the chart above shows, the premium has increased from 11% to 22% over the past seven days. The indicator hit an 8% premium on Dec. 9, but quickly recovered to 16%. As such, it reflects positive momentum as it stands above the quarterly average of 12%.

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Perpetual Futures Funding Remains Stable

Perpetual contracts, also known as inverse swaps, have an embedded interest rate that is usually charged every 8 hours. The funding rate ensures that there is no exchange risk imbalance. Although the open interest of buyers and sellers is always matched, the leverage can be different.

Sustainable rates above 2% per week translate into extreme optimism. This level is acceptable during a rising market, but can be problematic if the BTC price is sideways or in a downtrend.

In such cases, the high leverage of buyers increases the likelihood of large-scale liquidations during unexpected price drops.

Note that the weekly funding rate managed to avoid negative territory despite Bitcoin’s downward move on Dec. 11. This data suggests that short (sell) and long (buy) traders use roughly the same leverage.

Such an indicator can be considered neutral because both parties have room to increase the stakes.

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Futures contango returns to normal

Traders can gauge how bullish they are by measuring how high futures are priced relative to the general cash market. 3-month fixed-calendar futures should typically trade at a premium of 1.5% or more to regular spot exchanges.

Whenever this metric turns negative, it is a red flag. This condition is also known as a divergence and indicates that the market is turning bearish.

The chart above shows that the indicator briefly touched an extremely bullish 5% on Dec. 1, but later adjusted to 2.5% as Bitcoin failed to break through resistance at $20,000.

The indicator recently surged to 4%, showing confidence in the recovery of BTC prices, indicating optimism among professional traders.

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Option put/call ratio

The put-to-call ratio of 0.70 suggests that the open interest of put options lags that of call options by 30%, so sentiment is broadly bullish.

Conversely, an indicator of 1.20 favors put options by 20% and can be considered bearish. It is important to note that this indicator aggregates the entire BTC options market, including all calendar months.

With the price of Bitcoin approaching $20,000, it is only natural that investors would seek downside protection. Thus, on December 2, the put-to-subscribe ratio peaked at 0.70. Despite the increase, there is still a 30% bias towards the more bullish call option.

After this protection-seeking period, the indicator has returned to a healthy 0.64 level. Therefore, such an indicator suggests a moderately bullish outlook.

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