Bitcoin ETF flows increase as derivatives markets reflect caution

Main Receptors:

Bitcoin derivatives show persistent fear despite the current rally near $70,000 as futures premiums are pegged below neutral levels.

The markets' cautious stance stems from widespread risk-aversion and persistent concerns over institutional BTC liquidity and the security of the Bitcoin network.

Bitcoin (BTC) retested the $70,000 level on Wednesday, recovering from Tuesday's low of $62,500. While forays into Bitcoin exchange-traded funds (ETFs) helped calm market sentiment, the momentum failed to restore confidence in the BTC derivatives markets. Fundamentals are concerned as traders resist the ongoing rally towards $75,000.

US-listed Bitcoin ETFs posted net inflows of $764 million over two days, partially offsetting the $1.2 billion in losses seen over the past eight trading days. These large movements are typically associated with institutional activity, which indicates strong demand when the price drops below $65,000.

Despite this demand, the appetite for rich bullish positions in BTC futures has decreased significantly.

The annualized premium for Bitcoin futures against spot markets stood at 2% on Thursday, well below the 5% neutral threshold. The bullish momentum has largely disappeared since January 31, the day Bitcoin surrendered the $85,000 support level after holding it for more than nine months. Data from the options market suggests that professional traders are making it a priority to avoid downside exposure.

On Thursday, Bitcoin put traded (put) options at a 14% premium compared to equivalent call (buy) instruments. In a neutral market environment, this indicator typically fluctuates between -6% and +6%, indicating that fear remains the dominant force. Although this volatility measure improved from the 28% “panic” levels recorded on Tuesday, the gain to $70,000 did little to change traders' cautious outlook.

Is There An Element Behind Bitcoin's Price Weakness?

Recently, several unproven theories have been proposed to explain Bitcoin's 32 percent decline in seven weeks. This downward trend began following the market crash on October 10, 2025, which wiped out $19 billion in leveraged positions in the cryptocurrency sector. This volatility follows US President Donald Trump's announcement of a 100% tariff increase on Chinese goods.

Following that incident, Binance paid $283 million in compensation to users affected by liquidity leaks caused by internal Oracle pricing errors, system delays, and asset transfer failures. Binance co-founder and former CEO Changpeng “CZ” Zhao has since denied allegations that the exchange intentionally caused the October 2025 crash.

Other market participants have linked the recent atmosphere to the threat of quantum computing. These fears have intensified since Jefferies strategist Christopher Wood removed Bitcoin from his “greed and fear” model portfolio in January, citing potential risks to long-term security. In response, developers developed the BIP-360 proposal, which focuses on advancing post-quantum cryptography onchain.

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The most recent explanation for Bitcoin's volatility involves quantitative trading firm Jane Street. These claims gained momentum after Terraform Labs' court-appointed administrator sued the company in May 2022 over insider trading transactions that precipitated the collapse of Terra Luna Ecosystem.

Jane Street's latest 13-F filing revealed significant holdings in BlackRock's iShares Bitcoin Trust ETF and various Bitcoin mining companies. However, Julio Moreno, head of research at CryptoQuant, said that such activity is typical for delta-neutral strategies.

Finally, a 5% drop in NVDA ( NVDA US ) shares following strong earnings on Thursday points to a growing risk-off sentiment among investors, which may partly explain why Bitcoin is struggling to reach the $75,000 level.