Bitcoin rose above $80,000 for the first time since January. But at Wintermute, they believe it is too early to call this a sustained rally.
According to their view, the movement is primarily related to a short squeeze and mass liquidations in the derivatives market. Spot demand, which usually supports healthier growth, is noticeably weaker this time.
Because of this, current levels look rather fragile, and the movement itself seems more like a technical impulse than a sustainable trend.
Spot Versus Derivatives
In a recent report, Wintermute draws attention to a skew in market structure. Over the past month, open interest in bitcoin futures has grown by about $10 billion, from $48 billion to $58 billion. Meanwhile, spot activity, according to Binance News citing NS3.AI, has fallen to a two-year low.
Essentially, as the price approached $70,000, many participants started increasing shorts, expecting a reversal. But the market went higher. Liquidations began, accelerating the move and eventually pushing BTC above $80,000, up to the area around $83,000, where the 200-day average is.
Wintermute also notes that funding rates for perpetuals are still below normal levels. This leaves a chance for a new wave of forced liquidations if the market starts moving sharply again.
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The company specifically emphasizes the difference between closing shorts and real spot demand. Right now, in their opinion, liquidations are the main driver of growth.
And until there is sustained spot demand, the current movement remains vulnerable.
The Long-Term Outlook Looks Better
At the same time, the long-term picture for Wintermute is calmer. They point to inflows into BTC—ETF, about $623 million recently. ETF from Morgan Stanley, for example, raised $194 million in its first month and did not record a single day of outflows.
An additional factor is the drop in BTC reserves on exchanges to a seven-year low. This is usually seen as accumulation rather than preparation for sale.
These signals generally support a more positive long-term scenario. But the company clarifies: this is still not enough to offset short-term risks associated with growth in derivatives.
What Could Break the Trend
Wintermute highlights two risk factors.
The first is the macroeconomy of the U.S.. A weaker CPI could once again raise inflation concerns and hit risk assets. Meanwhile, fresh April data showed inflation rising by 3.8% year-over-year, slightly above expectations.
The second is political uncertainty around the possible appointment of Kevin Warsh as head of the Fed. This adds nervousness about the future path of rates.
The company allows for a move to $85,000, but considers current levels not the most comfortable from a risk perspective.
And the main point remains: if normal spot demand does not appear after the short squeeze, the market could easily pull back in the coming days.
