Bitcoin Derivatives Have Turned Bearish As Traders Anticipate BTC Dropping Below $60K

Bitcoin derivatives data indicates that both macroeconomic factors and crypto-specific developments contributed to BTC's recent decline below $60,000.

Source:bigpara.hurriyet.com.tr

Between June 23 and June 24, Bitcoin experienced a 5.8% drop, hitting a seven-week low of $59,700. Although it rebounded slightly to $60,400, the market saw $153 million in leveraged long BTC futures being liquidated due to margin calls. This activity shifted derivatives metrics to a neutral stance, marking the end of a five-week bullish trend.

Concerns About A Selloff From Mt. Gox And The German Government

Traders are grappling with the question of whether the deteriorating crypto market conditions signal a prolonged bear market or a temporary panic. This uncertainty stems from miners facing challenges in covering expenses amidst reduced profitability, coupled with potential large-scale sales by prominent entities. Should traders wait for a dip to $57,500 or capitalize on opportunities during this period of fear, uncertainty, and doubt?

Analysts have raised concerns following the announcement by the Mt. Gox bankruptcy estate regarding the imminent repayment in Bitcoin. Influential figure fejau suggested that insiders may have anticipated this disbursement, contributing to recent price weakness. Despite a favorable macroeconomic backdrop, fejau finds Bitcoin's performance perplexing. On May 28, 2024, Mt. Gox transferred 141,686 BTC valued at $8.6 billion, marking the first movement from the collapsed exchange in over five years. The trustee confirmed that a portion of cryptocurrency rehabilitation claims will be disbursed in July 2024. Uncertainty surrounds the exact amount of coins to be distributed in the short term, with concerns that a significant portion might flood the market, prompting exits from crypto investments.

Additionally, speculation arose over a recent transfer of nearly 6,500 BTC on June 19 from a wallet reportedly linked to the German government, as identified by Arkham Intelligence. This wallet, holding approximately 50,000 BTC (worth over $3 billion), was believed to have seized assets from an illegal movie website dating back to 2013. Though unconfirmed officially, the funds were transferred to recognized exchanges.

While attention also focuses on the possibility of U.S. interest rates declining by year-end, potentially benefiting risk on assets like Bitcoin, traders are more preoccupied with uncertainties surrounding the upcoming U.S. presidential elections and inflation data. Should economic indicators suggest an impending recession, investors may pivot towards cash positions and short-term U.S. Treasuries for safety.

The U.S. Personal Consumption Expenditures (PCE) inflation index, expected on June 29, forecasts a modest 0.1% month over month increase for May. Traders exhibit growing discomfort with the stock market, exacerbated by Nvidia's 5% decline on June 24. Concerns regarding demand for artificial intelligence amidst fierce competition from Intel, AMD, and others have led to reassessments of sector valuations.

Bitcoin Derivatives Indicate Weaker Conditions Potentially Exacerbated By FUD

In this current environment of moderate fear, uncertainty, and doubt (FUD), Bitcoin traders have grown increasingly cautious, particularly following a 16% drop in BTC price since it last approached $72,000 on June 7. The Bitcoin futures premium, which compares derivatives prices to the spot market, hit its lowest point in six weeks on June 24, indicating waning investor enthusiasm. 

Data shows the BTC futures premium fell to 8% on June 22, dropping below the 10% threshold typically associated with bullish sentiment. Previously, this indicator had peaked at 16.5% on June 7 but has steadily declined as Bitcoin struggled to regain momentum. Moreover, demand for Bitcoin put options (selling options) surged to its highest level in four weeks relative to call options (buying options). The increase in hedging via protective puts pushed the BTC options put to call volume ratio to 0.75 on June 24. While calls still outnumber puts by 35%, this marks a decrease from the previous week's average of 80%. Bitcoin derivatives metrics suggest traders are losing confidence in the bull market. However, there's a possibility that market reactions are exaggerated, hinting that the $60,000 support level might hold.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.