Important insights:
Derivatives data indicate low confidence among Bitcoin traders despite significant ETF inflows, maintaining downside risks.
The rise in gold prices and decreasing Treasury yields emphasize increasing investor anxiety as fiscal challenges and trade disputes affect sentiment.
Bitcoin (BTC) has faced challenges in regaining bullish momentum since its all-time high of $126,219 on Monday. Strong ETF inflows suggest solid institutional interest, but weak BTC derivatives metrics show traders are uncertain about the $117,000 support level.
Monthly Bitcoin futures are currently at a 7% premium to spot markets, showing minimal change over the past week. Typically, strong optimism drives this premium above 10% due to heightened demand for leveraged long positions. However, data suggests traders’ confidence remains stagnant, despite a 14% Bitcoin rally from Sept. 28 to Tuesday, as the indicator stays close to last month’s level.
Bitcoin struggles as gold sets new records amidst US-China tensions
Gold reached a record high near $4,050 on Wednesday, indicating that investors are seeking refuge amid the US’s fiscal challenges and slowing economic growth. Notable investor Ray Dalio warned that rising US debt poses a “threat to the monetary system,” according to Bloomberg.
US President Donald Trump has accused China of instituting new port fees on rare earth mineral exports, potentially leading to a “huge increase” in import tariffs on Chinese goods. The S&P 500 index fell 1.9% as investors expressed worries that escalating trade tensions could negatively impact corporate earnings, especially in AI sectors.
Though Bitcoin is often likened to digital gold, it maintains a notable correlation with the S&P 500, with the 40-day rolling correlation currently at 73%. Traders’ risk appetite seems heavily shaped by fears of a looming stock market decline, further supported by strong demand for short-term US government bonds.
Yields on the one-year US Treasury have dropped to 3.61%, nearing their lowest levels in over three years, signifying that investors are accepting lower returns amidst ongoing inflation pressures. The US Personal Consumption Expenditures index increased by 2.7% year-over-year in August, marking the highest growth in six months, with analysts predicting price acceleration in 2026 as import duties are enforced.
The delta skew for Bitcoin options rose to 8% on Friday, indicating that traders remain cautious about downside price risks. Notably, this indicator last indicated optimism on July 18 after a 13.4% rally over two weeks — suggesting persistent factors keep bullish sentiment for Bitcoin restrained.
Demand for stablecoins in China provides useful insights into traders’ positioning. When investors exit the cryptocurrency market, stablecoins typically trade at a 0.5% or higher discount compared to the official US dollar/CNY rate.
Related: Banks considering launching a stablecoin linked to G7 currencies
Tether has been trading at a slight discount since Wednesday, indicating that traders were previously cashing out as Bitcoin struggled to sustain positive momentum. However, the metric has returned to parity following Bitcoin’s drop below $120,000, suggesting traders are less inclined to exit the crypto market.
Despite a notable $5 billion in net inflows into Bitcoin spot ETFs throughout October, confidence remains low as macroeconomic risks persist. Metrics for BTC derivatives indicate traders are still hesitant to adopt a bullish stance, leaving potential for further declines in Bitcoin’s price.
This article serves general informational purposes and is not intended as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
