Bitcoin (BTC) bulls fear institutional interest is waning amid weaker demand for BTC futures. However, other metrics suggest that BTC price could avoid falling below $85,000.
Key Takeaways:
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Open interest in BTC futures fell to $42 billion, an eight-month low, suggesting a leverage flush somewhat than bearish bets.
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Bitcoin options prices suggest sentiment is stabilizing.
Open interest in BTC futures hits an eight-month low
After briefly testing $89,000 on Friday, Bitcoin was rejected again. The move surprised traders and liquidated over $260 million price of leveraged BTC futures positions.
Total open interest in BTC futures, USD. Source: Coinglass / Cointelegraph
Total open interest in BTC futures on major exchanges fell to $42 billion on Friday from $47 billion two weeks earlier, marking the bottom level in eight months. Nevertheless, the sharp decline in leverage shouldn’t be necessarily pessimistic as long and short positions all the time coincide.
Investor uncertainty intensified following a five-day outflow from spot Bitcoin ETFs totaling $825 million. Although this represents lower than 1% of the $116 billion in total deposits, traders fear October's upward momentum has faded amid global economic uncertainty.
Precious metals rise amid economic uncertainty
Gold and silver climbed to latest all-time highs on Friday as investors sought protection from rising U.S. debt.
Demand for government-backed debt increased, pushing 10-year Treasury yields to a three-week low of 4.12%. Some of the skepticism about US monetary policy stems from inconsistent signals around import tariffs.
Gold (left) vs. 10-year US Treasury yield (right). Source: TradingView
President Donald Trump's administration said Tuesday that tariffs on Chinese semiconductor imports have been postponed until June 2027.
According to Reuters, the previous week the US government lifted restrictions on the export of Nvidia's second-most powerful artificial intelligence chips to China, which had previously been banned by the Joe Biden administration on national security grounds.
Bitcoin’s base rate of interest is recovering
The monthly Bitcoin futures premium helps assess whether whales and market makers have turn into pessimistic. Under neutral conditions, BTC futures typically trade at a 5% to 10% annual premium, called the bottom rate, to compensate for the longer settlement period.
Since Bitcoin has repeatedly did not recapture the $90,000 mark since October twelfth, a certain pessimism, i.e. a lower base, could be expected.
Bitcoin 3-month futures base rate. Source: laevitas.ch
But the bottom rate of interest for Bitcoin futures stood at 5% on Friday, unchanged from the previous week. While the metric is down barely, it has moved away from the sub-4% levels seen on December 18, when Bitcoin was trading below $85,000.
Meanwhile, the Bitcoin options market might help determine whether whales and market makers predict further downside.
Bitcoin Options 30 Day Options Delta Skew (Put Call) at Deribit. Source: laevitas.ch
Delta skew measures the fee of put (sell) options relative to call (buy) instruments. When sentiment weakens, the metric rises above the neutral threshold of 6%, while bullish periods typically push it into negative territory.
Even if investor concerns stem from signs of weaker economic activity, Bitcoin continues to behave like a high-risk asset while precious metals have risen.
However, the roughly 1% decline in BTC futures and options open interest and net outflows from Bitcoin ETFs shouldn’t be an indication of a protracted bear market, especially if Bitcoin options metrics and the bottom rate remain healthy.
Although a retest of the $85,000 support stays possible, bulls look like steadily regaining confidence, even when Bitcoin fails to interrupt above $90,000 within the near term.
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