Bitcoin’s price jumped to around $94,000 recently, boosted by positive corporate earnings and signals from the Trump administration. However, bearish indicators in derivatives markets and evolving correlations with the S&P 500 raise questions about sustaining this momentum. Institutional investment suggests potential for Bitcoin prices to rise above $100,000, despite retail trader caution.
Bitcoin has experienced a notable surge, recently hitting around $94,000, marking a resilient 11% rise from April 20 to April 26. This followed a wave of investor optimism spurred by a mix of improved corporate earnings and hints from the Trump administration about potential easing of import tariffs. That said, there are some concerns lurking beneath the surface that could impact the cryptocurrency’s trajectory towards the $100,000 mark.
A significant factor in this recent rally was a record $3.1 billion influx into spot Bitcoin exchange-traded funds (ETFs), welcoming a wave of investment into the asset. Yet, an essential metric in the BTC derivatives market indicated a drifting towards bearish sentiment. Retail traders typically gravitate toward perpetual Bitcoin futures due to their alignment with the spot market. Unfortunately, a dip in positive funding rates often signals a reversal in outlook, hinting at potential challenges ahead.
On April 26, an unusual spike in negative funding rates caught many off guard. Such indicators typically suggest that sellers are out in force, a rarity during bullish market phases. Despite the volatility since mid-April, over $450 million worth of BTC short positions faced liquidation as prices climbed. The surprising resilience of Bitcoin amid shifting market conditions raises questions about the sustainability of this momentum.
In the backdrop, the S&P 500’s impressive 7.1% weekly gain also buoyed Bitcoin’s confidence. However, Trump’s remarks on April 25 concerning negotiations with China have induced some scepticism regarding the endurance of Bitcoin’s recent gains. Worth noting, earnings reports from companies reflect conditions prior to the intensification of the trade dispute, suggesting diverging factors affecting both the stock market and Bitcoin.
Looking at correlations, Bitcoin’s relationship with the S&P 500 has weakened considerably. The 30-day correlation now sits at just 29%, significantly lower than the 60% observed from March through mid-April. Though not signalling complete detachment, it does imply Bitcoin is moving away from being viewed as a mere proxy for tech stock performance—a shift that could affirm its status as an independent asset.
Compounding the narrative around Bitcoin is gold’s failure to sustain its bullish run after peaking at $3,500 on April 22. Skepticism around the “digital gold” analogy has emerged; however, Bitcoin staying above $90,000 could bolster faith in its long-term potential and lead to further appreciation.
Meanwhile, the rising demand for bullish positions reflected by Bitcoin futures indicates cautious optimism. The two-month Bitcoin futures premium jumped to a seven-week high, pushing towards the neutral range of 5% to 10%, while still indicating growing interest in bullish strategies.
Despite hesitancy among retail traders, substantial accumulation from institutional investors could still spark a push past the $100,000 threshold for Bitcoin in the upcoming future. It’s a delicate balance at play here amidst the market’s ongoing fluctuations.
