Key Insights
Recent trends in Bitcoin futures and options indicate a steady investment sentiment, even amid recent price fluctuations. The uncertainty in macroeconomic conditions and the intensifying trade tensions with the U.S. have diminished the likelihood of Bitcoin revisiting its peak price.
Bitcoin’s Recent Price Movement
Between May 27 and May 30, Bitcoin (BTC) experienced a 5.5% decline, reaching the $104,000 mark for the first time in nearly two weeks. Despite this downturn, professional traders in the Bitcoin market remain optimistic, as evidenced by the data from BTC derivatives and the sustained demand for stablecoins in China.
Macroeconomic Influences on Bitcoin
Bitcoin’s price trajectory appears to be closely tied to U.S. government bond yields, suggesting that broader economic factors are influencing its recent decline after peaking at $111,970 on May 22. The ongoing trade tensions initiated by former President Donald Trump have made investors more cautious regarding their risk exposure.
Government Bond Yields and Market Reactions
The yields on 10-year U.S. Treasury bonds reached a high of 4.60% on May 22 but have since decreased to 4.42%, as investors gravitated towards safer government-backed instruments. This decline in yields indicates that traders are willing to accept lower returns, which aligns with Bitcoin’s notable drop of $7,900 from May 22 to May 30.
Stability in Bitcoin Futures Premium
The premium on Bitcoin futures remains at 7%, a figure that has not changed since May 27 when BTC was priced around $110,000. This stability is well within the neutral range of 5% to 10%, suggesting that the futures market is not a factor in the recent price correction. Notably, there is no indication that excessive leverage contributed to Bitcoin’s peak on May 22.
Open Interest in Bitcoin Futures
As of May 30, the total open interest in Bitcoin futures, amounting to 700,000 BTC, was only slightly below the figures from May 27, reflecting a consistent interest among traders for leveraged positions. During this period, liquidations of bullish futures positions totaled $323 million over four days, representing a mere 0.5% of the total open interest.
Options Market Stability
The Bitcoin options market has shown minimal response to the recent retest of the $104,000 price. The 25% delta skew remains steady within the neutral range of -6% to +6%, indicating that traders are anticipating equal chances for price increases or decreases. Typically, if market participants expect further declines, this metric would rise above 6%, as put options would begin to command a premium.
Stablecoin Market Dynamics
In China, Tether (USDT) has been trading at a slight 0.4% discount compared to the official USD/CNY exchange rate, suggesting that Bitcoin’s decline has not prompted a significant withdrawal from the cryptocurrency market. Instead, there seems to be a shift towards stablecoins, as investors anticipate a less volatile macroeconomic environment.
Conclusion
The close correlation between U.S. Treasurys and Bitcoin, along with stable metrics in BTC derivatives, indicates that professional traders are not overly concerned by the recent drop to $104,000. From a technical analysis standpoint, this correction does not reflect diminished interest from traders, even amid reported net outflows of $347 million from spot Bitcoin exchange-traded funds (ETFs) on May 29.
This article serves as a general overview and should not be construed as legal or investment advice. The perspectives expressed here are solely those of the writer and do not necessarily align with those of Cointelegraph.
