Bitcoin Falls Below $67K As Stocks Sell Off, But BTC Derivatives Steady

Bitcoin (BTC) prices fell to $67,000 on October 21, erasing gains from the previous three days. According to some analysts, one reason for the correction is that investors are reducing their exposure to Bitcoin due to the risk of contagion in traditional markets. However, the parameters of BTC derivatives are particularly stable.

Even with fears that many economies are losing momentum or that confidence in the government's ability to repay debt is waning, demand for Bitcoin derivatives as a hedge remains steady. If the whales or the arbitrage desk were to assume further declines, these metrics would reflect more volatility.

Bitcoin futures show no signs of bearish betting.

In independent markets, the 5% to 10% premium for Bitcoin futures was only marginally affected on October 21. The monthly BTC futures high reflects the extended settlement period and bullish sentiment when the premium exceeds 10%. .

The annual premium (base rate) remained above 9% on October 21, though, as Bitcoin retested the $67,000 support level. However, before drawing conclusions, it is important to confirm that this sentiment is isolated to Bitcoin futures markets. Based solely on price charts, Bitcoin's price movement reflects the stock market's performance for the day.

of T. Arif Hussain, head of fixed income at Rowe Price, told Bloomberg that the U.S. 10-year Treasury yield “will challenge the 5% level in the next six months,” citing concerns about inflation and government budget spending. Yields increase as investors sell their bonds, indicating that traders are looking for higher profits.

Hussain said the government will “flood” the market with new credit, while the Federal Reserve is trying to reduce its balance sheet to curb inflation and prevent the economy from overheating. US debt interest costs have risen above $1 trillion a year, prompting the central bank to consider lowering interest rates.

The price of Bitcoin has yet to diverge from stocks

Amid uncertainty in the macroeconomic environment, fear, uncertainty, and doubt (FUD) have had a significant impact on Bitcoin price trends.

While bitcoin often appears to be out of touch with traditional markets—after showing periods of near-complete disengagement from the S&P 500—the 40-day correlation has remained above 80% over the past month, indicating that both asset classes have moved closely.

Unlike the period between mid-July and mid-September, where Bitcoin and the S&P 500 showed a negative or negligible correlation, recent data suggests that both markets are being driven by similar factors. This hypothesis is supported by the rising correlation between Bitcoin and gold, which was over 80% on October 3.

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Bitcoin options markets strengthen the resilience of derivatives. A 25% delta skew measure indicates that put (sell) options are trading at a discount compared to the corresponding call (buy) options.

Typically, volatility between -7% and +7% is considered neutral, and the current benchmark sits on the borderline of a neutral to bullish market.

In short, derivatives traders have not reacted with panic to Bitcoin's recent price decline. If traders were expecting further declines, the squid would have gone to zero or higher. Overall, Bitcoin derivatives continue to show resilience.

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.