Key takeaways:
Derivatives data indicate a lack of confidence among Bitcoin traders despite strong ETF inflows, leaving downside risks intact.
The rise in gold prices and declining Treasury yields underscore growing investor anxiety as fiscal pressures and trade disputes affect sentiment.
Bitcoin (BTC) has faced challenges in recovering bullish momentum since reaching its all-time high of $126,219 on Monday. Robust ETF inflows signal solid institutional interest, yet weaknesses in BTC derivatives metrics suggest traders are hesitant about the $117,000 support level.
Monthly Bitcoin futures are exhibiting a 7% premium compared to spot markets, showing minimal change over the past week. Periods of strong optimism typically see this premium exceed 10% as demand for leveraged long positions increases. However, data indicates that traders’ confidence has not improved, even after a 14% Bitcoin rally between Sept. 28 and Tuesday, as the metric remains consistent with levels from a month ago.
Bitcoin lags as gold reaches peak amid US-China tensions
Gold soared to a record high nearing $4,050 on Wednesday, indicating that investors are seeking safe havens as the United States confronts a fiscal crisis and economic deceleration. Renowned investor Ray Dalio stated that escalating US debt poses a “threat to monetary stability,” according to Bloomberg.
US President Donald Trump has accused China of imposing new port fees on rare earth minerals, potentially prompting a “massive increase” in tariffs on Chinese imports. The S&P 500 index declined by 1.9% as concerns grew that intensifying trade tensions could adversely impact corporate earnings, especially in the artificial intelligence sector.
While Bitcoin is often seen as digital gold, its correlation with the S&P 500 remains strong, with the 40-day rolling relationship currently at 73%. Traders’ risk appetite appears significantly impacted by fears of an approaching stock market decline, and high demand for short-term US government bonds reflects that sentiment.
Yields on one-year US Treasury notes fell to 3.61%, nearing their lowest levels in over three years, indicating that investors are willing to accept lower returns despite ongoing inflationary pressures. The US Personal Consumption Expenditures index rose by 2.7% year over year in August, marking the highest rate in six months, with analysts anticipating price acceleration in 2026 due to the impact of import duties.
The delta skew for Bitcoin options rose to 8% on Friday, indicating that traders remain apprehensive about downside exposure to prices. Notably, this indicator last reflected optimism on July 18, following a 13.4% rally over two weeks — suggesting that whatever is inhibiting Bitcoin’s bullish sentiment has persisted for some time.
Demand for stablecoins in China provides crucial insights into traders’ positions. When investors rush to exit the cryptocurrency market, stablecoins typically trade at a discount of 0.5% or more compared to the official US dollar/CNY rate.
Related: Banks explore launching a stablecoin linked to G7 currencies
Tether had been trading at a slight discount since Wednesday, indicating that traders were previously cashing out as Bitcoin struggled to retain bullish momentum. However, the metric returned to parity following BTC’s drop below $120,000, suggesting that traders are no longer keen on exiting the crypto market.
Despite impressive net inflows of $5 billion to Bitcoin spot exchange-traded funds (ETFs) this October, confidence remains low due to elevated macroeconomic risks. BTC derivatives metrics indicate that traders are still reluctant to adopt a bullish stance, allowing for potential further downside in Bitcoin prices.
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.
