Bitcoin (BTC) Spot and Futures Market Buying Kept Price Above $100,000 Despite $170M in Liquidations

Bitcoin (BTC) price has displayed strength at the $102,000 support level on May 19, following the $170 million in liquidations of leveraged positions.

Bitcoin (BTC) price managed to keep its upward momentum despite $170 million in crypto liquidations and some bad news for MicroStrategy (MSTR) shares.

The world’s largest cryptocurrency hit the $102,000 support level on May 19 after a triple whammy of macroeconomic risks, and an abrupt $5,000 correction from $107,090 may have been unexpected.

However, it does not necessarily diminish the chances of seeing new all-time highs in the near term, especially since Bitcoin derivatives metrics have shown resilience throughout the recent price swings.

What happened: Bitcoin’s annualized one-month futures premium remained elevated at around 6%, and it is currently at a neutral level of 5% to 10%, which has been the case for about a week now.

At first glance, one might say that there is a lack of optimism, but on the other hand, it shows that the buying pressure is coming more from the spot market.

Some analysts are attributing Bitcoin’s correction to comments by Japan’s Minister Shigeru Ishiba on the country’s fiscal situation being “undoubtedly extremely poor,” as per Bloomberg.

Yields on Japan’s long-term government bonds soared to their highest level in May 19 as traders demanded higher returns, signaling a lack of trust. Japan is the largest holder of U.S. Treasury bonds, so investors are worried about spillover risks at a delicate moment for the global economy.

This is especially pertinent as the ongoing trade war has severely limited the outlook for global growth, and it is pushing the world’s major economies into a technical recession.

Another factor that could be limiting Bitcoin’s upside is a report by Moody’s rating agency cutting the U.S. government’s long-term credit rating to A1 from AAA.

This is the first time since 1990 that the agency has downgraded the U.S. sovereign rating, and it is likely to have a significant impact on market sentiment.

It is also worth noting that Bitcoin’s correlation with the S&P 500 index has stayed above 80% since early May, which means that any bad news for the U.S. stock market could quickly spillover into the crypto sphere.

The impact of tariffs is still expected to be partially visible in second-quarter earnings reports, which could further dampen investor sentiment.

To assess whether Bitcoin has what it takes to reach a new all-time high in the near term, it is crucial to analyze the demand for stablecoins in China.

Periods of excessive optimism usually lead to stablecoins trading above fair value, which is not a healthy indicator, especially as Bitcoin is now above $105,000. However, USD Tether (USDT) has been trading at a slight 0.4% discount in China.

This signals that Bitcoin’s recent price increase is not being driven by FOMO (fear of missing out) from retail traders in the world’s largest cryptocurrency market.

Moreover, the lack of excessive leverage on Bitcoin futures and the limited use of futures leverage suggest that the current rally is sustainable.

What else happened: Bitcoin’s price showed strength despite a class-action lawsuit being filed against MicroStrategy (NASDAQ:MSTR) executives for allegedly making “false and/or misleading statements.”

The plaintiffs claim that Strategy executives failed to fully disclose the risks associated with Bitcoin’s investment and that they misled investors about the company’s financial condition.

The complaint mentions unrealized losses on Bitcoin, although these events do not affect a company’s cash flow.

It is unclear whether this case has foundation, but usually, negative headlines have a much stronger and longer price impact in neutral to bearish markets. However, MSTR shares were up 2.4% on May 19.

The fact that the $102,000 support held amid increased global economic uncertainty, strong spot buying and resilient derivatives metrics provides every indication that Bitcoin is well-positioned for further price gains from here.