Bitcoin (BTC) fell 8.3% from September 30 to October 1, reaching a two-week low of $60,207. Despite a slight recovery to $61,300 on October 2, the Bitcoin price remains 16.6% below its March 2024 all-time high, while gold and the S&P 500 are each within 2% of their recent record levels. We are maintaining it.
Given Bitcoin’s poor performance, one might expect traders to take a bearish stance. However, BTC derivatives indicators suggest otherwise. Some analysts argue that socio-political uncertainty could have a negative impact on short-term prices. Historically, Bitcoin has tended to outperform other asset classes following major events, indicating its potential resilience despite current market pressures.
Bitcoin vs. Gold, S&P 500 Come Back After Geopolitical Events. Source: BlackRock
On September 17, BlackRock published a report titled “Bitcoin: A Unique Diversifier,” highlighting that BTC’s fundamentals are different from traditional assets. The asset manager highlighted Bitcoin’s scarcity and decentralization as unique features and advised clients to view it as a “safe option against certain fearful and geopolitically disruptive events.”
Tensions in the Middle East have increased since Iran launched a ballistic missile toward Israel on October 1. According to CNBC, the attack was in retaliation for Israeli ground forces entering southern Lebanon to target Iranian-backed militants. U.S. National Security Advisor Jake Sullivan reportedly described the recent actions as “a serious escalation by Iran.”
The market uncertainty that has negatively impacted Bitcoin prices has been fueled by the upcoming US presidential election in November. Democrat Tim Walz and Republican JD Vance participated in the Oct. 1 vice presidential debate, but the event did little to change the trajectory of an unusually tight election race, according to Reuters.
Investors also adopted a more cautious approach after automaker Tesla announced third-quarter deliveries that slightly missed market expectations, sending its shares down 4%. However, it is worth noting that Tesla’s stock price has risen 20% in the past 30 days, thanks to the expected ‘robotaxi event’ on October 10th and positive sales data in China reported by Yahoo Finance.
Bitcoin derivatives have shown resilience despite price declines.
In this scenario, one would have expected Bitcoin investor sentiment to deteriorate. To assess how whales and arbitrage desks are positioned, you can compare current leverage demand to last week’s demand.
Whales and market makers prefer monthly Bitcoin futures contracts because there is no funding rate. This causes these instruments to trade at a 5% to 10% premium to the regular spot market to compensate for their longer settlement periods.
Annual premium for Bitcoin 2-month futures. Source: Laevitas.ch
As of October 2, the Bitcoin 2-month futures premium was sitting at 7%, up slightly from 6% the previous week, but still within the neutral range. Moreover, traders appeared less optimistic about the Bitcoin price on September 24th. At that time, the indicator rejected the key $64,000 level before falling below the 5% threshold.
To see if this sentiment only applies to the futures market, it is important to analyze Bitcoin options as well. The 25% delta skew measures the difference between the call (buy) option premium and the put (sell) option premium. Skewness exceeding 7% indicates excessive downside risk, while values between -7% and +7% are considered neutral.
relevant: CME’s Bitcoin Friday futures hit 31,000 contracts on day one
Bitcoin 1-month options delta skew, put call on Deribit. Source: Laevitas.ch
Over the past seven days, Bitcoin options delta skew has remained neutral at -1%, showing resilience despite the BTC price falling 3% during this period. This data is consistent with the neutral sentiment observed in the Bitcoin futures market, suggesting a balanced and cautious outlook among traders.
Currently, there are no clear signs that Bitcoin traders are taking a bearish stance despite ongoing socio-political and economic uncertainty. As a result, the resilience of BTC derivatives suggests traders are satisfied with current price levels, while the bears suggest they are hesitant to bet on further price declines.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.