Bitcoin Price Continues to Fall – How Are Pro BTC Traders Positioned?
Bitcoin (BTC) fell 8.3% between September 30 and October 1, hitting a two-week low of $60,207. Despite a modest recovery to $61,300 on October 2, Bitcoin's price remains 16.6% below its March 2024 all-time high, while gold and the S&P 500 are each within 2% of their most recent highs.
Given the low performance of Bitcoin, one would expect traders to adopt a bearish stance; However, BTC derivatives benchmarks suggest otherwise. Some analysts argue that social and political unrest can negatively affect short-term prices. Historically, Bitcoin tends to outperform other asset classes following major events, demonstrating resilience despite current market pressures.
Bitcoin bounces back from gold and S&P 500 after geopolitical events. Source: Blackrock
On September 17th, BlackRock published a report titled “Bitcoin: A Unique Diversifier” showing that BTC's fundamentals differ from traditional assets. The asset manager emphasized Bitcoin's scarcity and decentralization as unique features and advised clients to view it as a “flight to safety in light of fear and around some geopolitically disruptive events.”
Tensions in the Middle East escalated after Iran fired ballistic missiles at Israel on October 1. According to CNBC, the attack was in retaliation for Israeli ground forces entering southern Lebanon to attack an Iranian-backed militant group. U.S. National Security Adviser Jake Sullivan described the latest moves as “a significant development by Iran.”
The market volatility that has negatively affected the price of Bitcoin is also fueled by the upcoming US presidential election in November. Democrat Tim Walz and Republican JD Vance participated in the Oct. 1 vice presidential debate, but the event did little to change the direction of an exceptionally tight race, Reuters reported.
Investors also took a more cautious approach after automaker Tesla reported third-quarter deliveries that were slightly below market expectations. However, as reported by Yahoo Finance, it is interesting to note that Tesla stock has appreciated by 20% in the last 30 days.
Bitcoin derivatives have shown resilience despite price volatility.
In this scenario, one would expect Bitcoin investor sentiment to deteriorate. To assess how whales and arbitrage desks are positioned, one can compare the current demand with the previous week.
Whalers and market makers favor monthly Bitcoin futures contracts due to the lack of funding rates, which causes these instruments to trade at a 5% to 10% premium to regular spot markets to compensate for longer settlement periods.
Bitcoin 2-month futures annual premium. Source: Laevitas.ch
In the year As of October 2nd, Bitcoin's two-month futures premium has remained near the 7% level, slightly higher than last week's 6%, but still in a nice neutral range. Additionally, traders were less optimistic about the price of Bitcoin after the key $64,000 level was rejected on September 24, when the index fell below the 5% threshold.
To determine if this sentiment is isolated to the futures market, it is important to analyze Bitcoin options as well. The 25% delta skew measures the difference between call (buy) and put (sell) option premiums. Oscillations above 7% indicate the risk of overestimation, values between -7% and +7% are considered neutral.
Related: CME's Bitcoin Friday Futures Start With 31K Contracts in One Day
Bitcoin 1-Month Options Delta Skew by Derbibit, Call. Source: Laevitas.ch
Over the past seven days, the Delta Skew of Bitcoin options has remained neutral at -1%, showing resistance despite the BTC price falling 3% during this period. This data is consistent with the neutral sentiment seen in Bitcoin futures markets, which suggests a balanced and cautious attitude among traders.
Currently, despite the ongoing socio-political and economic uncertainty, there are no clear signs that Bitcoin traders will take a bearish position. Therefore, resistance in BTC derivatives suggests that traders are comfortable with current price levels, while also indicating that bears are hesitant to bet on further price declines.
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.
