- This week started on a highly positive note as Bitcoin’s price surpassed $42,000 on Monday, December 4th.
- Bitcoin’s 150% surge this year in 2023 helped break its strong correlation with stocks.
- Analysts like Sean Farrell highlighted that this is a sign of Bitcoin’s current low correlation with traditional macro assets.
After the Bitcoin price reached 42K dollars on December 4, a significant increase in open positions was observed: What is the significance of this?
Bitcoin Price Reached $42,000
This week started on a highly positive note as Bitcoin’s price surpassed $42,000 on Monday, December 4th. However, Bitcoin entered into a partial consolidation and is currently trading at $41,660 with a market capitalization of $817 billion.
Bitcoin’s 150% surge this year in 2023 helped break its strong correlation with stocks. The correlation of BTC with stocks has decreased this year.
Bitcoin showed its resilience by rising 5.8% on Monday, reaching above $42,000, demonstrating its resistance and upward trend. In contrast, traditional indicators like global stocks and bonds faced losses at the beginning of the week.
Analysts like Sean Farrell highlighted that this is a sign of Bitcoin’s current low correlation with traditional macro assets. Throughout 2023, Bitcoin’s correlations with stocks and gold decreased. The 90-day correlation coefficient between Bitcoin and MSCI Inc.’s global stock index dropped from 0.60 to 0.18 at the beginning of the year.
Similarly, the correlation between Bitcoin and spot gold also dropped from 0.36 to nearly zero. This change indicates a diminishing alignment in movements, emphasizing that Bitcoin has evolved as a more distinct and less correlated asset within the financial landscape.
Bitcoin Open Positions at a Two-Year High
The open position amount of Bitcoin perpetual futures contracts on the Deribit derivative exchange reached a yearly high, reaching $740 million. This level coincides with the same period as Bitcoin’s all-time high, surpassing $68,000.
Increasing open positions indicate renewed capital inflows into the market and reflect high participation and potential liquidity. Justin d’Anethan, Head of Business Development for APAC at Keyrock, notes that a significant premium in CME Bitcoin futures contracts is an additional indicator of increased institutional participation.
D’Anethan stated, “It’s hard to ignore a healthy futures premium on CME contracts, signaling that there are sophisticated players looking for BTC exposure.” This observation is consistent with data, showing an all-time high in CME Bitcoin long open positions held by asset managers, nearly reaching $2.2 billion.
D’Anethan emphasized that the increased participation from sophisticated players is impacting the decision on spot Bitcoin ETFs expected by the end of January. He noted that this development highlights the evolving dynamics in the Bitcoin market and the growing interest from institutional asset owners.
While everyone talks about the arrival of the Bitcoin ETF next month, another major catalyst is the upcoming Bitcoin block reward halving event in April 2024. Historical trends show that the Bitcoin block reward halving is a significant catalyst for pushing BTC prices higher. Analysts are starting to make optimistic price predictions, with some expecting up to $500,000 in the next Bitcoin bull run.
