Negentropic, co-founder of on-chain data analytics firm Glassnode, posted on the X platform yesterday (26th) that Bitcoin's (BTC) recent price behavior has shown a clear structural improvement: the market is moving away from the previous compressed state dominated by derivatives hedging exchanges, and the future price trend has gradually shifted in favor of the bulls.
Pullbacks are met with buying support, and the price structure remains intact.
Negentropic stated that, from an overall trend perspective, Bitcoin's pullbacks have not resulted in panic selling; instead, they have been repeatedly met with buying pressure, and the recent lows have remained unbroken, indicating that the market has a certain consensus on the current price range, and the price structure remains healthy.
He also specifically pointed out that the core of the market structure shift lies in the "relief of derivatives pressure." Recently, Bitcoin faced its largest options expiration date in history, with a nominal value of approximately $23.6 billion. Negentropic noted that in the past few weeks, massive safe-haven demand has passively controlled prices, with most upward attempts being quickly absorbed by hedging mechanisms rather than driven by natural market selling pressure.
With the expiration of these options, related hedging funds will gradually withdraw from the market, and the price of Bitcoin will no longer be "pegged" by the derivatives structure. The market is entering a new price discovery phase.
Further Reading: Volatility Warning: The largest options settlement in history, worth $27 billion, erupted today, causing Bitcoin to briefly dip below $87,000.
Price discovery reverts, increasing the probability of continued upward movement.
Negentropic believes that when prices are no longer driven by safe-haven trading, the market tends to revert to a price discovery mechanism determined by supply and demand. Currently, from a structural perspective, the market is biased towards continuing its upward trend rather than entering a trend reversal.
At the macro level, Negentropic further points out that the US M2 money supply continues to expand. Latest data shows that the annual growth rate of M2 reached 4.3% in November, with the total size rising to $22.3 trillion, a record high, and marking 21 consecutive months of growth. The level is significantly higher than the peak in 2022.
Even after adjusting for inflation, real M2 still showed an annual growth of 1.5%, marking 15 consecutive months of increase. He stated frankly that, from a long-term perspective, the trend of continuous dilution of the purchasing power of fiat currency has not changed, which is an important background supporting the narrative of scarce assets.
Negentropic concluded that with the easing of structural pressures on derivatives and a still relatively loose liquidity environment, tailwinds are gradually building in the market. He also advised investors to take a longer-term view during holiday periods to reassess the market's position and long-term trends.
