When market participants are cautious, the premium of two short and medium-term Bitcoin Futures traded at BitMEX is on the rise. According to Luke Martin, a trader and analyst, the divergence between Bitcoin spot prices and premiums, which is the cost of acquiring either December 2019 (XBTZ19) or March 2020 (XBTH20), and obliging to buy or sell Bitcoin at expiry at BitMEX, is expensive. This hints of confidence of Bitcoin future prices and therefore a boost for traders that are cautious of committing.
Bitcoin Futures Guide Sentiment
The cost of Bitcoin Futures often increases when traders are bullish, expecting the price of the underlying asset to increase from spot rates by expiry. Conversely, when people are liquidating and bears have their noses in front, the product is availed at a discount.
Here’s a chart to simplify the concept:
I’m having a hard time finding another time period where premiums rise 30-40% while spot price is dropping. pic.twitter.com/ZtU288TzZh
— Luke Martin (@VentureCoinist) December 2, 2019
BitMEX is the world’s largest crypto derivatives trading platform offering a range of products including perpetuals, Futures and…
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Author: Dalmas Ngetich