Bitcoin Futures Premium Drops to Three-Month Low Amid Strong ETF Inflows

The Bitcoin futures premium has fallen to a three-month low despite strong institutional inflows into BTC. Traders are becoming bearish as options metrics reflect a lack of confidence, with Bitcoin trading only 8% below its record high. Despite macroeconomic pressures, institutional demand for Bitcoin remains robust, yet uncertainty persists over market sentiment and price movement.

Bitcoin’s futures premium has recently dipped to a three-month low, even though prices remain just 8% from their all-time high of $103,300. The general sentiment in the market among crypto traders actually seems pessimistic, which is a bit surprising given the BTC price’s proximity to historical highs. With Bitcoin trading at $102,400 now, many are left wondering if economic factors are playing a role in this shift in mood.

The downturn in Bitcoin derivatives seems to tie back to broader concerns about economic conditions. Typically, under normal circumstances, Bitcoin futures tend to trade 5% to 15% higher than the spot markets due to the longer time for settlement. However, since June 12, the premiums have lingered below that neutral level, especially after failing to surpass the $110,000 mark. In fact, futures premium fell below 4% on Thursday, marking the lowest point observed since April when Bitcoin experienced a steep drop.

The situation begs the question: Is this negative sentiment limited to futures contracts or does it ripple into the options market too? Generally, when traders are nervous about a significant price drop, the price of put options rises, pushing their skew above 5%. Alternatively, during more optimistic periods, that same indicator drops below -5%. Currently, the Bitcoin options skew is hovering around 5%, indicating a shift toward bearish sentiment. Just a week earlier, it had a more bullish tone at -5%, highlighting the disappointment in Bitcoin’s recent performance.

Investor sentiment hasn’t been unfavourable across the board, though. The Russell 2000, which tracks small-cap US companies, managed to hold its support level at 2,100, even as Middle Eastern tensions and recession worries weighed heavily on the market. Interest rates hovering above 4.25% in the United States, coupled with persistent inflation, only add to the uncertainty.

Interestingly enough, while Bitcoin’s derivatives market is showing weakness, institutional interest in Bitcoin appears quite robust. Over the last 30 days, US-listed Bitcoin spot exchange-traded funds recorded a substantial $5.14 billion in net inflows. Furthermore, firms like Strategy, Metaplanet, the H100 Group, and The Blockchain Group have snapped up significant amounts of BTC during this period.

There’s no clear indication of what may reinstate traders’ confidence in Bitcoin again. However, the longer the price lingers around the $100,000 mark, the more empowered the bears might become. As traders’ feelings swing between fear and optimism, this volatility appears set to continue for the foreseeable future.