3 Signs Bitcoin Price Is Not Ready to Hit All-Time Highs

Bitcoin (BTC) hit a two-month high on September 28th and is currently approaching the $66,000 level. The move follows a rise in the S&P 500 index, which hit a record high on September 26, helped by strong economic data and measures to boost Chinese market and investor confidence. However, several indicators show that Bitcoin is far from entering a bull market.

Investor skepticism is clouding Bitcoin’s recent rally.

Investors may be skeptical due to the previous rejection of $70,000 or out of fear that a recession is underway that could negatively impact risk markets, including cryptocurrencies.

While this sentiment does not guarantee a sell-off, it does make it easier for bears to inject fear, uncertainty, and doubt (FUD) to suppress the price of Bitcoin. Regardless of what is demoralizing Bitcoin traders, there is no guarantee that the Bitcoin price will continue to benefit from the bullish momentum in the stock market.

Some analysts argue that the central bank’s shift to expansionist monetary policy means the economy is at risk. Contrary to popular belief, this does not necessarily mean that a market bubble is likely to burst. That’s because large-cap technology companies can capture value even in times of declining revenues.

High margins and strong balance sheets allow companies like Google, Amazon, Apple and Microsoft to benefit from discounted niche acquisitions and face less competition for new hires and equipment, including microchips for artificial intelligence. In fact, an overheated economy has a negative impact on margins as it creates shortages and higher logistics costs.

Meanwhile, in the case of Bitcoin, investors may still value Bitcoin’s scarcity and sovereignty, but Bitcoin’s drivers are significantly different from those of traditional stock markets. Moreover, historically, when investors fear a coming recession, they tend to seek refuge in gold, short-term government bonds, and companies that dominate those sectors.

Essentially, just because the S&P 500 continues to hit new highs doesn’t necessarily mean the Bitcoin price will benefit. Therefore, Bitcoin bulls should analyze whether the fundamental conditions have changed after multiple rejections of $70,000 before concluding that low interest rates and high government debt are enough to push BTC prices higher.

First of all, according to user COINAppRankBot of the X social network, the Coinbase exchange mobile app ranked 385th on September 28th. This is an improvement from 482 on September 14, but it indicates lackluster interest from retail investors despite the Bitcoin price rising 21% in three weeks. However, Bitcoin bulls may argue that the glass is “half full” as there is still room for improvement.

China’s stablecoin discount signals bearish sentiment amid institutional inflows.

An influx of institutional investors may have driven the recent Bitcoin price surge, and data from cash exchange traded funds (ETFs) corroborates this claim. However, recent Chinese market data shows the opposite trend. By examining stablecoin demand in China, we can determine whether investors are entering or exiting the cryptocurrency market.

Typically, due to heavy demand, stablecoins trade at a premium of more than 1.5% compared to the official US dollar exchange rate, while bear markets generate discounts.

China’s USDT premium has remained below parity for the past two weeks, indicating bearish sentiment. This indicator contradicts the recent preference for cash ETFs in the US and further strengthens the bearish argument for a lack of investor demand.

relevant: Bitcoin price is targeting an 11% monthly rise as DXY threatens a ‘big’ crash.

Investors’ lack of confidence is also evident in the Bitcoin futures market. The same goes for monthly contracts, which are generally preferred by whales and institutional investors because there are no fund rate fluctuations. In neutral markets, these derivatives contracts tend to trade at a premium of 5-10% per annum to account for their longer settlement periods.

Data shows that despite a rally toward $66,000 on September 29, the Bitcoin futures premium has stabilized at 6%. These savvy derivatives traders may have maintained a neutral stance, showing reluctance due to fear of missing out, but at the same time giving the bears exactly what they deserved. They needed a signal that they lacked confidence.