Bitcoin (BTC) price prediction: Improving sentiment in the derivatives market, analysts call for a target price of $120,000.

Since Wednesday, Bitcoin (BTC) has been trading in a narrow range between $107,300 and $110,600, sparking speculation about a potential sudden pump in price. Market participants are increasingly convinced that new liquidity injected by major central banks could become a catalyst for Bitcoin's rise.

Market analyst TedPillows pointed out that Bitcoin has been lagging behind the global money supply. If the historical correlation between the two remains unchanged, Bitcoin could see a significant rebound. The analyst also believes that the delay in the deadline for U.S. import tariffs has given the "green light" for Bitcoin to move towards $120,000.

(Source: TedPillows)

U.S. Treasury Secretary Becerra stated that for countries that have not yet reached an agreement with the Trump administration, import tariffs will be raised on August 11. The U.S. initially set Wednesday as the deadline for negotiations, so investors welcomed this extension, seeing it as a sign of progress in avoiding a trade war.

Last Saturday, the demand for put options on Deribit surged, pushing the put-to-call ratio to its highest level in over a year. Although this unusual activity may reflect an increased demand for downside protection, its impact seems to have faded. By Monday, the indicator rebounded to 0.8, favoring call options.

If traders significantly increase their leveraged short bets on Bitcoin, the premium of Bitcoin futures contracts may be affected.

Under neutral conditions, the trading price of monthly contracts usually has a premium of 5% to 10% over the spot price in exchange for a longer settlement time. A surge in short-selling demand often pushes this premium down to below 5%.

Futures data supported the view that bearish sentiment intensified over the weekend, with Bitcoin futures premium dropping from 4.5% on Friday to 3.5% on Saturday. However, by Monday, despite Bitcoin trading below $108,000, the premium had risen above the neutral level of 5%.

Despite growing concerns over economic recession, sentiment in the Bitcoin derivatives market is still improving

Bitcoin derivative product data may not yet indicate a bullish trend, but the necessity for downside protection seems to have passed. This shift demonstrates increased investor confidence, especially after the S&P 500 index fell 0.9% on Monday.

After Trump announced a 25% tariff on imported products from Japan and South Korea, concerns about economic recession intensified. As a result, the yield on 10-year U.S. Treasury bonds rose to a two-week high, as investors demanded higher returns from holding government bonds.

The escalating trade tensions have heightened investors' general trend of risk aversion. However, Bitcoin has managed to hold above $107,000, coupled with improvements in derivative indicators, enhancing its chances of rebounding to $120,000.

Ultimately, whether the prediction comes true will depend on a shift in investor perception, from viewing Bitcoin as a risk asset to seeing it as a hedge and an alternative financial system.