Bitcoin (BTC) Price Consolidation Signals Market Confidence as Derivatives Indicate Bullish Sentiment

Bitcoin (BTC) has been trading within a narrow 7% range since Nov. 12, signaling a period of consolidation around $91,000.

Bitcoin (BTC) price has been largely consolidating within a narrow 7% range since Nov. 12, signaling a period of digestion following the recent surge to a new all-time high at $92,248.

Despite the limited directional movement, derivatives markets have been signaling a high level of bullishness among professional traders, who are apparently unfazed by the recent failure to breach the $92,000 resistance level multiple times.

Bitcoin 30-day options 25% skew (put-call) at Deribit. Source: LaevitasOne key metric to gauge traders’ sentiment in the options market is the 30-day delta skew, which has dropped to its lowest level in four months. This reading indicates that the market is pricing a steeper discount for put (sell) options.

Levels below -6% typically suggest bullish sentiment and reflect confidence in the $87,000 support level, particularly from market makers, whales and arbitrage desks.

While such data suggests optimism, it does not guarantee that investors are confident the bull market will continue, especially after the recent 25% directional move over the past 30 days. Hence, it is crucial to analyze the factors driving recent momentum.

For example, if analysts conclude that MicroStrategy is the primary catalyst for Bitcoin’s surge to a new all-time high, signs should be visible in BTC futures and margin markets.

Is MicroStrategy the sole driver behind Bitcoin’s bull run?The speculation that a few entities are largely responsible for the buying activity above the $87,000 level gained further traction on Nov. 18 after MicroStrategy revealed an additional purchase of 51,780 BTC.

According to an SEC filing, the company now holds over $29 billion in Bitcoin and is actively pursuing a plan to raise $21 billion through the issuance and sale of company shares.

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In comparison, investors should expect to see signs of continued price appreciation if spot BTC exchange-traded fund (ETF) net inflows show early signs of adoption, including increased exposure from pension funds and large hedge fund managers.

However, the latest data from Nov. 14 and 15 revealed $771 million in net ETF outflows as investors decided to take profits following the recent rally.

To understand how professional traders are positioned, it’s essential to analyze Bitcoin futures and margin markets. For instance, sustained demand for leveraged BTC futures indicates bullish sentiment, while increased use of price hedging suggests whales and arbitrage desks lack confidence in the current price momentum.

Bitcoin 2-month futures annualized premium. Source: LaevitasThe Bitcoin two-month futures premium (basis rate) surged to 17% on Nov. 18, far exceeding the 5%–10% neutral threshold. This level of optimism was last observed almost eight months ago, in late March, when Bitcoin successfully defended the $64,000 level after two weeks of downward pressure.

To further assess traders’ sentiment, it’s essential to analyze BTC margin markets. Unlike derivatives contracts, which always require a buyer and a seller, margin markets allow traders to borrow stablecoins to buy spot Bitcoin. Similarly, bearish traders can borrow BTC to create short positions, betting on a price decline.

Related: ‘I put most of my wealth into Bitcoin, so I am fully committed’ — RFK Jr.Bitcoin margin long-to-short ratio at OKX. Source: OKXCurrently, the Bitcoin long-to-short margin ratio at OKX is 14 times in favor of longs (buyers). Historically, periods of excessive confidence have driven the indicator above 40 times, while levels below 5 times favoring longs are generally considered bearish.

Ultimately, Bitcoin derivatives and margin markets signal strong bullish momentum, regardless of the concentration of buy-side activity driven by MicroStrategy. The lack of a significant impact from the retest of the $88,700 level on Nov. 17 further suggests that investors are not ready to exit at the first negative price swing.