According to the price movement of Bitcoin it's likely that BTC will rise by 62 percent

The BTC/USD derivatives metrics are now mirroring readings that took place in late-September, when Bitcoin rose by 62 percent.

Bitcoin (BTC) has been under $45,000 for 14 days and is now 40% below the all-time high of $69,000. This fluctuation is comparable to late-September 2021, when Bitcoin price remained stagnant for 11 days and was 36% below the prior $64,900 all-time high on April 14.

Bitcoin price at Coinbase, USD. Source: TradingView

Traders should look at the Bitcoin futures contracts premium, also known as “basis,” to see whether the current price momentum resembles that seen in late September. Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ significantly from regular spot exchanges.

A trader may assess the level of bullishness in the market by calculating the difference in cost between futures and regular spot markets. The three-month future contract trades at a 15% or greater annualized premium (basis) as a result of excessive optimism from buyers.

Bitcoin 3-month futures premium in Sept. 2021. Source: laevitas.ch

The difference between the common rate and the fed’s target rate is referred to as a basis spread. For example, during September, the normal rate varied from 9% to 13%, indicating confidence, whereas on September 29th, just before Bitcoin broke out above $45,000, the 3-month futures premium was at 6.5%.

Bitcoin 3-month futures premium. Source: laevitas.ch

When referencing the present market circumstances, there are a lot of parallels to September 2021, just before Bitcoin rose from $45,000 to $600,000 and began a 62 percent advance. First, the current Bitcoin 3-month futures premium is at 6.5%, which indicates mild optimism.

When investors are least expecting it, unexpected positive market developments occur. This is precisely the case right now, with investors being taken by surprise. To see whether this move was limited to the instrument, one should also look at options markets. The 25% delta skew shows a difference in the premium between buy (buy) and put (sell) puts. When “fear” is widespread, because the protective put options premium is greater than call options, the indicator will become positive.

When market makers are bullish, the 25% delta skew moves to the negative area. The range between -8 percent and +8 percent is deemed neutral when readings fall below -8 percent or exceed +8 percent.

Deribit Bitcoin options 25% delta skew in Sept. 2021. Source: laevitas.ch

The 25 percent delta skew was around 10% by late September 2021, suggesting that options traders were panicking. Market makers and arbitrage desks were charging excessive fees for protective put (bearish) positions.

Deribit Bitcoin options 25% delta skew. Source: laevitas.ch

The current market situation, according to the current 25% delta skew indicator, is neutral. However, on Jan. 10, the metric came close to hitting the 8 percent positive threshold, suggesting a modest bearishness. Metrics reveal that the existing market environment resembles late-September when Bitcoin reversed a 24-day downtrend and sparked a 62 percent rally in three weeks.

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