Bitcoin has recently peaked at $97,930, buoyed by strong institutional demand, but futures market sentiment is mixed. Despite significant inflows into US Bitcoin ETFs, traders remain wary due to macroeconomic risks, including US-China trade tensions. Some indicators suggest short-term upside potential, though many investors are hesitant to leverage their positions.
Bitcoin (BTC) has hit an impressive high of $97,930 recently, driven by a surge in demand from institutional investors. Yet, oddly enough, the futures market tells a different story. Traders appear a bit nervous about whether this rally can last, as macroeconomic uncertainties loom large over the market. Notably, despite an influx of $3.6 billion into US spot Bitcoin ETFs, concerns about an economic recession might cap bullish sentiment, suggesting that reaching $110,000 by 2025 may be a stretch.
Over the past week, the annualised premium for Bitcoin’s two-month futures has consistently ranged from 6% to 7%. This sits firmly in the neutral range of 5% to 10%. To put this in perspective, back in January, when BTC hovered around $95,000, the futures premium was above 10%. So, the apparent decline reflects a growing sense of caution among traders, and they seem less convinced that BTC can push towards the coveted $100,000 mark.
A slight worry for Bitcoin advocates is how gold has outperformed BTC lately. Gold has seen a substantial 20% increase from $2,680 to $3,220, while Bitcoin, even after surpassing silver in market cap, now finds itself overshadowed by gold’s staggering $21.7 trillion valuation. There’s increasing trepidation that Bitcoin’s now tightly woven link with the stock market is weakening its image as the “digital gold.”
Interestingly, the recent $3.6 billion inflow into US spot ETFs may very well be influenced by delta-neutral strategies. If Bitcoin holders are merely shifting their assets into listed products or utilising derivatives for hedging, the direct price impact could be limited. This observation aligns with Bitcoin’s relatively modest 5% gain during the same time period.
To gauge traders’ sentiments around Bitcoin’s current price of approximately $97,500, it makes sense to dive into the BTC options market. The current 25% delta skew metric indicates less optimism among traders, nearing its lowest since mid-February. This is a turnaround from just a few weeks ago when put options were the go-to choice for traders. This change could imply that whales and market makers are now designating greater chances to the upside.
Furthermore, Bitcoin’s derivatives resilience hints at potential price gains. Many traders seemingly expect an upward trend, but there’s a notable apprehension about employing leverage. Some analysts speculate that this cautious approach could set the stage for an unexpected price surge, bolstered by Bitcoin’s earlier resilience through its retest of $74,500 in early April.
Ultimately, Bitcoin’s fate is intertwined with the ongoing trade relations between the US and China. The trade war’s lingering effects may keep Bitcoin tethered to S&P 500 fluctuations for the time being. While this situation might thwart hopes of a new all-time high anytime soon, BTC derivatives still exhibit a slight bullish tilt.
