Bitcoin rallies to $61K, but derivatives traders are still skeptical — Here is why
Bitcoin ( BTC ) price gained 6.4% in less than 12 hours on Sept. 17, breaking above $61,000 for the first time in three weeks. However, despite this price rally, derivatives markets indicate that sentiment did not improve, leaving Bitcoin bulls concerned. Is Bitcoin more likely to hold $60,000 or slip back into the $58,000 range?
Investors react to stronger than anticipated macroeconomic data
Bitcoin's price movement mirrored the S&P 500 index, which reached an all-time high after macroeconomic data increased the probability of a 0.50% interest rate cut by the US Federal Reserve on Sept. 18. US retail sales rose 0.1% month-over-month in August, according to Census Bureau data. Meanwhile, industrial production grew by 0.8% in the same month, driven primarily by a recovery in motor vehicles and parts.
Previously, investors were concerned that the US economy was slipping into a recession, particularly in the consumer sector due to rising financing costs. Some analysts argue that the stock market has entered a bubble phase, fueled by inflated valuations of tech companies and excessive leverage in the financial system. Cracks have already appeared in the commercial real estate market. As a result, the recent uptick in economic activity has helped reduce the risks of a stock market correction.
Currently, US Treasury markets are pricing in a 63% probability of a 0.50% interest rate cut, up from 34% the previous week, according to the CME FedWatch Tool. Yet, according to Stephen Juneau, senior US economist at Bank of America Securities, the data released on Sept. 17 did not significantly alter the Fed's perception of the economy, as reported by Yahoo Finance.
Bitcoin derivatives show modest apathy and lack of conviction
To assess whether Bitcoin traders have turned bullish, it's essential to examine the BTC futures premium, also referred to as the basis rate. In neutral markets, these instruments trade at an annualized premium of 5% to 10% to account for their extended settlement period.
Bitcoin 2-month futures annualized premium. Source: Laevitas.ch
Data shows that the Bitcoin futures premium stabilized at 6% after nearing the neutral 5% level on Sept. 16. Despite the price rally from $57,675 to $61,330, investor sentiment remains cautious. Thus, whether $61,000 becomes a support level is still in question, as traders continue to lack confidence.
To determine whether the sentiment is specific to futures markets, one should cross-check the Bitcoin options skew metric. When arbitrage desks and market makers overcharge for downside protection, the 25% delta skew metric tends to rise above 6%. Conversely, periods of excitement typically present a negative 6% delta skew.
Bitcoin 30-day options 25% delta skew. Source: Laevitas.ch
Currently, the BTC options 25% skew stands near 2%, indicating that put (sell) options are priced similarly to call (buy) options. This neutral sentiment has persisted for the past week and last ventured outside this range on Sept. 6, when Bitcoin briefly traded below $54,000.
Related: Bitcoin price action ‘tough to call’ after Fed rate decision — Zerocap
It's also important to assess the demand for stablecoins in China, which serves as a proxy for traders entering or exiting cryptocurrency markets. The USD Tether (USDT) premium measures the difference between the value of USDT in peer-to-peer transactions and the official US dollar exchange rate in yuan.
USDT Tether (USDT) peer-to-peer trades vs. USD/CNY. Source: OKX
Data reveals that demand for stablecoins in China remains weak, as Tether has been trading at a 0.3% discount since Sept. 9, suggesting that investors have been cashing out.
Overall, derivatives data indicate that Bitcoin investors lack enthusiasm , even as BTC flirts with the $61,000 level. Traders remain skeptical that the bullish momentum will continue, especially ahead of the Federal Reserve's decision on Sept. 18, with many hesitant to add positions.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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