Bitcoin's Perpetual Market Shows Signs of Life, Signaling Renewed Upside Momentum

After a period of stagnation and downtrend, the perpetual market of Bitcoin has experienced a brief rebound in the past few weeks.

Bitcoin perpetual market shows signs of recovery with a brief uptick in traders’ interest and a small increase in funding rates. This brief return to positive territory is an indication of renewed upside momentum for Bitcoin. However, it is still falling short of earlier levels, which could be attributed to diminishing speculative enthusiasm and a reduction in leverage demand.

Key Points:

The Bitcoin perpetual market has experienced a brief rebound in the past few weeks after a period of stagnation and downtrend. This comeback was followed by a period of elevated volatility and price consolidation.

Recent on-chain data shows that the Bitcoin perpetual market is once again regaining its momentum, signaling positive advancements around the digital asset.

A Gradual Comeback In Bitcoin's Perpetual Market

Market expert and the host of the Crypto Banter show, Kyle Doops, shared the development in the Bitcoin Perpetual Market Directional Premium metric with the crypto community on the X (formerly Twitter) platform.

“A metric I follow closely for Bitcoin's perps is the total premium paid on the market (usually expanding during bull cycles). It dropped to about $1.7 million in mid-September. It's now back up to $10.8 million. Still a far cry from the January levels, but a small W.”

The recent shift in the key metric is in tandem with an improvement in market mood as Bitcoin tries to rebound from its ongoing consolidation phase. The brief uptick reflects expanding investors' interest due to rising trading activity.

According to Kyle, by mid-September, the cumulative monthly premium for long-side contracts had dropped from a high of $120 million in March to about $1.7 million, and it had only slightly recovered to $10.8 million ever since.

Furthermore, the expert noted that this upswing still falls well short of January 2023 levels, which indicates diminishing speculative enthusiasm and a reduction in leverage demand during the market correction. However, as confidence in the asset strengthens, this brief uptick could be seen as an indicator of renewed upside momentum for Bitcoin, with market conditions persistently stabilizing.

In another X post, Kyle Doops reported a notable increase in the Estimated Leverage Ratio (ELR), which now takes stablecoin reserves into account.

“The Bitcoin Estimated Leverage Ratio (ELR) has gone up quite a bit recently (it now factors in stablecoin reserves). This increase in ELR suggests higher risk in the Bitcoin derivatives market.

Traders should reduce risk and avoid emotional decisions, especially during volatile conditions because the market is prone to abrupt changes.”

BTC Maintaining Its Renewed Upward Strength

Bitcoin has maintained a positive trend since the digital asset witnessed a rebound about a week ago. The renewed strength has led to growing confidence in the short and long-term potential of BTC, with multiple analysts predicting that a major rally could take place soon.

Crypto analyst and trader Milkybull recently forecasted an impending massive rally for BTC in the near term due to a bullish breakout from the Moving Average Convergence Divergence (MACD) indicator. According to the analyst, this breakout is essential as it might signal a bull run to the $120,000 price level, suggesting that the next move is about to happen.

“The MACD just crossed bullish on the daily time frame for the first time since the bull run began. Last time, we moved from the $60,000 to the $120,000 price level during this pattern. I think it's safe to say that we're about to move again.”

However, given the potential of heightened volatility in the upcoming days, traders and investors are closely watching for further confirmation of the bullish cross as they cautiously engage with the crypto asset.

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