Bitcoin Recovers Above $70,000, Futures and Options Indicators Show 'Extreme Fear'
Although Bitcoin (BTC) has recovered somewhat from its recent plunge and re-surfaced above $70,000 (approximately KRW 121.44 million), extreme anxiety remains in the derivatives market. In particular, the aftermath of large-scale liquidations and reduced leverage demand suggest further upward momentum could be limited for the time being.
Bitcoin recovers above $70,000, but investor sentiment remains uncertain.
The price of Bitcoin has risen approximately 17% from its low of $61,500 (approximately 88.09 million won) last Friday, recovering to the $70,000 level this week. However, the market remains volatile. Options skew (the ratio of demand for put options to demand for call options) has soared to 20%, indicating investor concerns about another large-scale liquidation.
With a total of $1.8 billion (approximately KRW 2.6343 trillion) worth of Bitcoin futures positions liquidated over the past ten days, there are concerns in the market that some hedge funds and market makers may have suffered significant losses and been forced out.
Leverage demand declines… "Confidence still lacks"
Open interest in the Bitcoin futures market remained at 527,850 BTC last week, similar to the previous week, but the dollar value of the contracts fell 20% over the same period. This decline roughly mirrors the Bitcoin price decline, suggesting that some bullish investors are increasing their positions even as the price continues to decline.
However, the "base futures premium (the annualized difference in returns between futures and spot)," a key derivatives indicator, has fallen to around 2% per annum. This is the lowest level in the past year, indicating a significant decline in demand for leveraged bullish positions. Generally, a neutral scenario considers the premium to be appropriate at 5-10% per annum.
Options Markets Also Warning of "Extreme Uncertainty"
The Bitcoin options market is also showing strong downside concerns. The two-month put-call skew on major exchange Deribit reached 20%, reflecting unprecedented anxiety. This figure is significantly higher than the 11% skew seen on November 21st of last year, when Bitcoin's price plunged 28% from $111,177.
In the absence of clear market downside catalysts, investor sentiment has weakened, likely due to the deepening underlying uncertainty and distrust. Instability has been exacerbated by rumors that a major exchange, market maker, or hedge fund is experiencing a serious liquidity crisis.
It will likely take some time for the upward turn to occur.
Several derivative indicators indicate that "extreme fear" currently prevails in the market. Even if Bitcoin surpasses $70,000 in the short term, it will take time for market confidence to recover. This is particularly true when compared to the record-breaking liquidation of $4.65 billion (approximately KRW 6.806 trillion) on October 10th of last year, which occurred on October 10th of last year, the current situation is characterized by gradual, sustained selling pressure.
Overall, for Bitcoin to continue its rebound, leverage demand from market makers and whale investors must revive. However, options indicators and weakening futures premiums strongly reflect a cautious market stance. For the time being, cautious trading strategies are expected to prevail.
🙋♂️ When the derivatives markets collapse, what will be your weapon?
With extreme fear gripping the Bitcoin futures and options markets, investors must be able to interpret "market structure," not just price.
Survival is more important than profit.
TokenPost Academy's [6-Step The Professional] course is designed to equip you with the "real skills" to survive even in a bear market.
- Understanding Funding Rates: Learn how funding rates react during bullish and bearish market periods.
- Leverage Risk Management: Mastering Isolation/Cross Margining, Position Sizing, and Stop-loss Strategies
- Option Strategies in Practice: From Long and Short Options to Advanced Hedging Strategies like Bull Call Spreads and Protective Puts
When futures premiums collapse and fear spreads through the options market, as they do now, truly skilled investors turn risk into profit.
The market of fear, don't be afraid anymore.
Curriculum : A systematic 7-step masterclass covering everything from DeFi to futures options and macro analysis.
Benefit : First month free event in progress!
Go to : https://www.tokenpost.kr/membership
TP AI Precautions
This article was summarized using a TokenPost.ai-based language model. Key points in the text may be omitted or inaccurate.
Get real-time news... Go to TokenPost Telegram
Copyright © TokenPost. Unauthorized reproduction and redistribution prohibited.
