Bitcoin’s spot price action does little to please BTC options traders.
Between April 12 and April 13, the 13.3% decline in Bitcoin (BTC) forced many traders, mainly to sell their positions. This significant move resulted in the unwinding of $387 million in forced long positions and reduced open interest by $5.4 billion. At first glance, price action and its impact on volatile markets indicate a reduction in risk appetite.
However, cryptocurrency traders are used to volatility and often get overly frustrated during uncertain times. Closer examination is necessary to determine whether the retest of $61,500 is enough to cause panic, or whether the path to $72,000 and Bitcoin's all-time high after the halving is possible.
Could Bitcoin not provide a secure store of value?
Despite a modest recovery to $63,500 on April 15, overall sentiment among traders fell, making it challenging to support the narrative of Bitcoin as ‘digital gold'. In addition, the price movement exposed weaknesses in bitcoin ETFs, particularly as holders failed to sell over the weekend. This situation has shown the limited exposure to Bitcoin indirectly through such tools.
The recent introduction of spot ETFs into the US has had a significant impact on the price of Bitcoin, even when it comes to outflows from grayscale GBTC. The sector raised $55 billion in assets under management in three months, drawing high-profile visits from sales teams at BlackRock, Fidelity, BitWise and VanEck to institutional clients and senior asset managers.
Especially given the stability of gold prices amid recent global political unrest and escalating conflicts in the Middle East, its price storage remains unchallenged. The metal is trading at $2,350, having maintained last week's high of $2,432 on April 12.
According to analyst Tom Lin, recent price movements suggest that investors do not see Bitcoin as a safe haven, unlike gold, which was appreciated by the news of military conflict on 12 April, but this analysis may overlook the fact that gold markets are not moving. Weekends, and other variables, such as excess energy, can affect Bitcoin's performance.
Historical data shows that the price actions of Bitcoin and gold are rarely synchronized. The correlation coefficient ranges from -1, indicating that markets move in opposite directions, to +1, indicating perfect, balanced movement. A score of 0 represents no relationship between the two properties.
The data also emphasized that Bitcoin is not related to gold, contradicting claims that the cryptocurrency has collapsed as a store of value. This highlights the benefits of holding assets that are not directly linked to traditional financial assets.
Bitcoin derivatives remained firm as it neared $61,500.
To find out whether professional traders have become more pessimistic about Bitcoin, an analysis of BTC monthly futures contracts is crucial. In the independent market, these contracts usually offer a premium of 5% to 10%, which implies a longer settlement period.
The data showed that the annual BTC futures premium was largely unaffected by the recent price correction to $61,500, as the indicator remained above the 10% neutral-to-power threshold.
Related: Hong Kong Green Lights First Place Bitcoin ETFs – Law Decoded
In order to fully assess market sentiment, it is also important to examine the Bitcoin Options Volatility Index. Typically, a deviation above 7% indicates bearish expectations, while a deviation below 7% indicates bearish sentiment.
Over the past two weeks, the 25% delta skew of BTC options has remained in neutral territory, indicating a balanced demand for bullish and bearish strategies. Another significant fact is that when Bitcoin tested the $61,500 support on April 13, there was no sign of panic. In conclusion, the market data does not indicate any concerns or reduce the optimism of investors.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
