3 Signs Bitcoin Price Is Not Ready To Make New All-Time Highs

Bitcoin (BTC) closed at a two-month high on September 28 and is currently approaching the $66,000 mark. The move peaked on September 26 following gains in the S&P 500 index on strong economic indicators and measures aimed at boosting markets and investor confidence in China. However, several indicators show that Bitcoin is far from entering a bull market.

Investor skepticism has clouded Bitcoin's recent rally.

Investors may be skeptical because of the previous rejection of $70,000 or fear that a recession is underway, which will negatively affect risks in the market, including cryptocurrencies.

Although this sentiment does not guarantee a selloff, it makes it easier for bears to create fear, uncertainty, and doubt (FUD) to suppress Bitcoin's price. Whatever dampens the spirits of bitcoin traders, there is no guarantee that the price will continue to benefit from the stock market's bullish activity.

Some analysts argue that central banks' shift to expansionary monetary policy signals that economies are at risk. Contrary to popular belief, this doesn't necessarily mean a market bubble is about to burst, as mega-cap tech companies can hold their value even as earnings decline.

Companies with high margins and strong balance sheets, such as Google, Amazon, Apple and Microsoft, could benefit from bargain buyouts and face less competition for new hires and equipment, including microchips for artificial intelligence use. In fact, excessive economies of scale create shortages and higher logistics costs, which is negative for profit margins.

Meanwhile, for Bitcoin, investors may still value its scarcity and sovereignty, but the drivers differ significantly from the traditional stock market. What's more, historically, when investors fear a looming recession, they seek shelter in gold, short-term government bonds and field-controlled companies.

Basically, even if the S&P 500 continues to make new highs, that doesn't necessarily mean Bitcoin prices will benefit. So, before concluding that low interest rates and high government debt are enough to boost BTC's value, Bitcoin bulls need to analyze whether the fundamentals have changed after several declines at $70,000.

For starters, the mobile application of the Coinbase exchange was ranked number 385 on September 28, by the user COINAppRankBot on the X social network. While this represents an improvement from the position of 482 on September 14, it shows a lack of retail investor appetite even though Bitcoin's price has gained 21% in three weeks. However, the Bitcoin bull can argue that the glass is “half full”, because there is still room for improvement.

China's stable currency decline reflects sentiment among institutional investors

Inflows from institutional investors may have driven the recent rally in Bitcoin prices, and data from exchange-traded funds (ETFs) supports this thesis. However, recent data from Chinese markets shows the opposite trend. By examining the demand for stablecoins in China, we can determine whether investors are entering or exiting the cryptocurrency markets.

Typically, excess demand causes stablecoins to trade at 1.5% or more against the official US dollar rate, while bear markets cause declines.

The USDT premium in China has remained below par for the past two weeks, indicating bearish sentiment. This measure further strengthens the bears' argument against the recent appetite for spot ETFs in the United States and a lack of investor interest.

Related: Bitcoin price eyes 11% monthly gain as DXY threatens ‘major' fall

Investors' lack of conviction can also be seen in Bitcoin futures markets, where even monthly contracts are favored by whales and institutional investors due to their variable liquidity. In independent markets, these derivative contracts tend to trade at a 5% to 10% annual premium with long settlement periods.

Data shows that despite the rally to $66,000 on September 29, the Bitcoin futures premium has stabilized at 6%. These savvy derivatives traders have maintained their neutral stance, showing reluctance for fear of losing, but at the same time they may have actually given the bears a shot. They needed it – a sign of innocence.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.