Analysis: The derivative market is reflecting a reversal of Bitcoin's bearish sentiment, with increased demand from long positions.

On November 27th, according to Bloomberg, although Bitcoin has experienced a retracement of up to 36% from its all-time high set in early October, the implied volatility of the cryptocurrency remains at a relatively controlled level. This change indicates that as Bitcoin gradually moves towards institutionalization, its risk transmission mechanism is being reconfigured. In the early stage, Bitcoin's value was mainly driven by speculative traders who aimed to profit from its frequent and large price fluctuations. The derivatives market as a whole is showing a reversal of bearish sentiment. According to Coinglass data, the demand for long positions in Bitcoin perpetual contracts, a high-leverage trading market commonly used by cryptocurrency traders, is currently on the rise, while the open interest size is at a relatively moderate level. The funding rates of these contracts have turned positive, suggesting that after falling into negative territory earlier this week, bullish bets have once again gained the upper hand. Deribit data shows that the most open interest is in bullish options with a strike price of $100,000. In the previous week, the market was mainly focused on downside protection around $80,000 and $85,000. Spencer Hallarn, the Head of OTC Trading at GSR, stated: "In the past few weeks, speculative long positions have significantly decreased, as can be seen from the reduction in open interest and funding rates of perpetual contracts. This also positions the cryptocurrency market for the next upward movement."