Bitcoin Soars to $61,000, But Derivatives Traders Are Still Skeptical. Here’s Why

Bitcoin (BTC) price rose 6.4% in less than 12 hours on September 17, breaking $61,000 for the first time in three weeks. However, despite this price gain, sentiment in the derivatives markets appears to have not improved, and Bitcoin bulls are concerned. Is Bitcoin more likely to hold $60,000, or is it more likely to fall back to the $58,000 range?

Investors react to stronger-than-expected macroeconomic data.

Bitcoin’s price action was similar to the S&P 500, which hit a record high after macroeconomic data raised the possibility of a 0.50% rate cut by the U.S. Federal Reserve on September 18. U.S. retail sales rose 0.1% in August from the previous month, according to Census Bureau data. Meanwhile, industrial production rose 0.8% in the same month, mainly driven by a recovery in autos and parts.

Previously, investors had been concerned that the U.S. economy was headed for a recession, particularly due to rising financing costs in the consumer sector. Some analysts argued that the stock market was in a bubble phase due to inflated valuations of technology companies and excessive leverage in the financial system. Cracks had already appeared in the commercial real estate market. As a result, the recent increase in economic activity has reduced the risk of a stock market correction.

According to the CME FedWatch Tool, the current Treasury market is looking at a 63% chance of a 0.50% rate cut, up from 34% last week. However, according to Stephen Juneau, chief U.S. economist at Bank of America Securities, the data released on September 17 did not significantly change the Fed’s economic outlook, Yahoo Finance reported.

Bitcoin derivatives show humble indifference and lack of confidence.

To assess whether Bitcoin traders are turning bullish, it is essential to examine the BTC futures premium, or the benchmark interest rate. In a neutral market, these products trade at a premium of 5% to 10% per annum to account for the long settlement period.

According to data, the Bitcoin futures premium stabilized at 6% after approaching the neutral level of 5% on September 16. Despite the price increase from $57,675 to $61,330, investor sentiment remains cautious. Therefore, it is still questionable whether $61,000 will be a support level, and traders are still lacking confidence.

To determine if sentiment is limited to the futures market, you should cross-check the Bitcoin options skew indicator. The 25% delta skew indicator tends to rise above 6% when arbitrage desks and market makers are overcharging for downside protection. Conversely, periods of excitement typically show a negative 6% delta skew.

The current BTC options 25% skew is close to 2%, indicating that put (sell) options are priced similarly to call (buy) options. This neutral sentiment has persisted throughout the past week, with the last time it was outside this range was on September 6, when Bitcoin briefly traded below $54,000.

relevant: Bitcoin Price Movements After Federal Reserve Rate Decision ‘Difficult to Predict’ – Zerocap

It is also important to evaluate the demand for Chinese stablecoins as a proxy for traders entering or exiting the cryptocurrency market. The USD Tether (USDT) premium measures the difference between the value of USDT in peer-to-peer transactions and the official U.S. dollar exchange rate in yuan.

Data shows that demand for stablecoins in China remains weak. Tether has been trading at a 0.3% discount since September 9, suggesting investors are cashing out.

Overall, derivatives data shows that Bitcoin investors are lacking enthusiasm despite BTC’s nearing $61,000 level. Traders are skeptical that the bullish momentum will continue, especially ahead of the Federal Reserve’s decision on September 18, and many are hesitant to add to their positions.