The bullish feeling given after Donald Trump’s victory in the presidential elections on November 5 fell completely, according to an indicator linked to the future of CME Bitcoin (BTC).
The indicator in consideration is the spread between the “continuous” standard BTC term negotiations and next month and the end of the month on the global derivative giant. A continuous contract is a calculated representation of a series of successively expired term contracts, allowing a continuous series of historical data for the analysis.
The spread has shrunk at $ 495, the lowest since November 5, having reached a summit at $ 1,705 on December 17, according to Data Source TradingView. In other words, he completely reversed the Trump bump in a sign of weakening of bullish feeling on the market.
“The propagation of narrowing between the term contracts on the first month and the next month of Bitcoin could suggest that traders are dipping their price expectations,” said Thomas Erdösi, product manager at CF Benchmarks, in Coindesk.
The trial of the Trump bump probably means that the market has exceeded the story that a pro-Crypto president in the White House is good for industry, and macro correlations are back in the driver’s seat.
“What we can see is that the base of the front contract has dropped considerably since the beginning of March, signaling moderating the short -term expectations that the main catalyst of the recent gathering – the election of President Trump – has been fully assessed,” said Erdosi.
This is already happening. BTC and the Wall Street technological index, Nasdaq, have dropped by 20% and 8%, respectively, since the beginning of February on a myriad of factors, including geopolitical uncertainty, Trump prices and the prospects of inflation and economic growth.
In addition, the Bitcoin market had to digest the disappointment concerning the lack of new purchases in the strategic plan for the reserve of digital assets of Trump. Last week, Trump signed a decree, leading the creation of a strategic reserve which includes the BTC seized in application measurements.
“The announcement of the Bitcoin Strategic Reserve is not what the market hoped. Many expected the reserve to buy new Bitcoin, but instead, they said they would not sell any of their existing or confiscated Bitcoin bitcoin. Although it is a positive decision, this caused a sharp drop in Bitcoin prices”, said Ian Balina, founder and CEO Metrics, told Coindesk in an email.
Futures are still in Contango
While the spread between the contracts next month next month and next month has shrunk, the entire curve remains in Contango, when distant term contracts (with longer deadlines) are negotiated at a level higher than dated.
This is how it is generally on all markets due to factors such as storage, financing, insurance costs and expectations of prices during the weeks or months to come.
“The fact that perpetual financing rates remain positive and that the basis is still in Contango suggests that the recent decision is motivated by long places which are not in a hurry, rather than a wider market contagion,” noted Erdösi.
