The bitcoin futures market suggests a potential further decline in the price of the leading cryptocurrency. This conclusion was reached by Greg Magadini, Director of Derivatives at Amberdata.
According to the expert, the weak reaction in the futures basis indicates that true investor capitulation has yet to occur.
Magadini explained his forecast by examining the dynamics of the price difference (basis) between futures and the spot market:
- historically, the bottom of a bear cycle is accompanied by a deep discount of futures to spot;
- during the latest price drop, the basis of 90-day contracts changed little;
- currently, the indicator is about 4%, which corresponds to the risk-free yield of U.S. Treasury bonds.
The analyst compared the current situation to the end of 2022. At that time, bitcoin found a bottom below $20,000, and futures traded at a 9% discount. According to Magadini, the current market structure leaves room for another wave of decline before the final capitulation.
Return of American Buyers
The recovery of the leading cryptocurrency’s quotes after the drop to $60,000 coincided with a reversal of a key demand indicator in the U.S.
The Coinbase Premium Index, which tracks the spread between bitcoin’s price on the U.S. exchange Coinbase and its average global rate, sharply recovered. At the peak of the sell-off, the indicator fell to -0.22%, but by February 10, it rose to -0.05%.
Although the metric remains in negative territory, the trend indicates the return of American investors. Market participants took advantage of a buy-the-dip strategy after the easing of seller pressure.
Analysts view Coinbase Premium as a proxy for assessing institutional and dollar capital flows. A deep discount usually signals aggressive selling by U.S. players or their exit from the market.
The recovery of the index to neutral values suggests that buyers once again see value in the asset after price stabilization.
What’s Happening with Bitcoin?
At the time of writing, digital gold is trading at $69,063 (+0.2% for the day). The drop from the October high is over 45%.
Tim Sun, Senior Researcher at HashKey Group, noted in a comment to Decrypt that the rate of price decline is slowing. However, there is no clear signal of a trend reversal yet. The market continues to be pressured by low liquidity and regulatory uncertainty.
Sun clarified that the accumulation of coins by large players only restrains the fall but does not guarantee immediate growth.
BTSE’s Chief Operating Officer Jeff Mei expressed a more optimistic view. He believes the sell-off has already begun to reverse, and further recovery depends on the actions of institutional investors and the easing of global financial tensions.
Earlier, Bernstein described the current bitcoin correction as “the weakest in history,” and the Sharpe ratio pointed to the final stage of the bear market.