Bitcoin (BTC) gained about 7% over the past week and for the first time in more than three months rose above $81,000.
Although BTC surged sharply, derivatives market data shows that investors are not rushing to become overly optimistic. Because of this, the market is increasingly questioning how long the current momentum will last.
According to Derivatives, Traders Are Not Yet Rushing to Believe in Continued Strong Growth
Despite the rise in BTC, the behavior of the derivatives market looks noticeably calmer. There is not yet the kind of euphoria in the market that usually accompanies strong upward breakouts. This is evident in both macroeconomics and on-chain data.
Bitcoin two-month futures basis rate. Source: Laevitas
On Tuesday, monthly bitcoin futures traded at a premium of about 1% per year relative to the spot market. This is noticeably below the neutral range.
Usually, futures sellers demand a premium of about 4% to 8% to compensate for the cost of capital. Such caution appeared in the market back at the end of January, when bitcoin was trading around $90,000. Because of this, traders are now behaving much more cautiously. Therefore, the market is looking not only at futures but also at options.
In a normal situation, the difference between them remains in the range of about -6% to +6%. If professional traders start to fear a market drop more, the delta skew indicator rises above 6%.
30-day delta skew on bitcoin (put-call) on Deribit. Source: Laevitas
On Tuesday, the delta skew indicator for 30-day bitcoin options approached the neutral mark of 6%, although the market still maintains a slight bearish bias.
At the same time, there is no sign of panic among large players. But buyer confidence has noticeably weakened.
Expensive oil is also putting pressure on the market. Brent is now holding around $110 per barrel, and concerns about inflation continue to weigh on global economic expectations.
Inflation expectations in the US and 10-year bond yields in Europe. Source: TradingView
Inflation expectations in the US have approached their highest levels in the past 10 years and reached 2.5%, according to data from the Federal Reserve Bank of Cleveland.
At the same time, investors are demanding higher yields on eurozone government bonds.
Despite inflationary pressure, the Nasdaq 100 index hit a new all-time high on Tuesday. This shows that interest in risk assets has not disappeared.
Bitcoin On-Chain Activity Drops Amid Active Buying Through Spot ETFs
Part of bitcoin’s growth may have come from the overall appetite for risk, but weak on-chain metrics indicate declining demand from retail investors.
Daily on-chain bitcoin volume and number of transfers. Source: Glassnode / Cointelegraph
Over the past three months, daily transfer volume on the bitcoin network has fallen by 54% and dropped to $4.1 billion.
The number of transactions has also approached its lowest level in more than five years. Although the price of bitcoin does not directly depend on on-chain activity, such data usually shows how actively ordinary users interact with the network.
Market nervousness was also added by the temporary halt in purchases by Strategy (MSTR) ahead of the quarterly report release.
Michael Saylor’s company actively increased its bitcoin holdings over the past four weeks, but analysts expect that due to the revaluation BTC on the balance sheet Strategy will report a quarterly loss.
Weak macroeconomic conditions and declining on-chain activity have negatively affected the bitcoin derivatives market. However, from Friday to Monday, spot bitcoin ETFs in the US attracted $1.16 billion in net inflows. This indicates that large players continue to enter BTC through ETFs.
Paradoxically, it is precisely the caution of traders that may now help the market continue to grow. If bitcoin continues to rise, sellers will be forced to close short positions at a loss, which could further accelerate the movement.
