bitcoin Approaches All-Time High Amid Cautious Market Sentiment

Key Insights

• bitcoin‘s price nears its historical peak, yet derivatives indicators reveal a hesitant trading environment.
• Concerns over global trade tensions are reflected in the USDT discount in China and recent outflows from spot bitcoin ETFs.

bitcoin (BTC) experienced a notable rise, surpassing $109,000 on Wednesday after testing the $105,200 support level earlier in the day. This surge coincided with reports of monetary expansion in the eurozone and signs of a weakening labor market in the United States.

Despite being only 2% away from its all-time high, market participants are showing reluctance to adopt a bullish outlook, as indicated by bitcoin derivatives metrics. This cautious approach has led some investors to question the longevity of the current rally.

bitcoin Futures Premium Signals Caution

On Wednesday, the bitcoin futures premium remained below the neutral threshold of 5%. The slight uptick from 4% on Monday continues a trend that began on June 11, when the indicator last approached a bullish stance, aligning with bitcoin‘s earlier attempts to breach the $110,000 mark.

Eurozone Monetary Expansion: A Catalyst for bitcoin‘s Surge?

While pinpointing a single cause for Wednesday’s price increase is challenging, the eurozone’s record-high broad money supply (M2) in April likely played a significant role. Recent data revealed a 2.7% year-over-year growth, which aligns with the expansionary trends seen in the US monetary base. Additionally, ADP reports indicated a decline of 33,000 in US private payrolls for June.

Some analysts suggest that the lack of demand for leveraged long positions in bitcoin reflects heightened recession risks, particularly amid escalating global trade tensions. US President Donald Trump has threatened to increase tariffs on Japanese imports above 30% if an agreement is not reached by the July 9 deadline.

Reports indicate that eurozone ambassadors have instructed EU Trade Commissioner Maroš Šefčovič to adopt a firmer stance during his upcoming discussions in Washington. European capitals are reportedly advocating for a reduction in the current 10% reciprocal tariff, although internal disagreements persist regarding potential retaliatory measures.

bitcoin Options Market Reflects Balanced Sentiment

To assess whether the cautious sentiment in bitcoin derivatives is confined to futures, examining the BTC options market is essential. If traders anticipated a significant downturn, the 25% delta skew would rise above 6%, indicating a premium for put (sell) options over call (buy) options.

Currently, the skew metric stands at 0%, unchanged from two days ago, suggesting that traders perceive balanced risks for price movements in either direction. While this indicates lukewarm sentiment at the $109,000 level, it marks an improvement from the bearish outlook observed on June 22.

Declining Demand for Cryptocurrencies in China

Despite bitcoin reaching a three-week high, interest in cryptocurrencies in China has sharply declined, as evidenced by the stablecoin premium. The Tether (USDT) discount compared to the official US dollar exchange rate in China typically indicates investor apprehension, reflecting a trend of cashing out from crypto markets. Conversely, strong demand for cryptocurrencies usually drives stablecoins above their peg. The current 1% discount is the steepest seen since mid-May, signaling a lack of confidence in bitcoin‘s recent price gains.

Traders are increasingly worried about the implications of the ongoing tariff conflict, particularly following a significant $342 million in net outflows from spot bitcoin exchange-traded funds (ETFs) on Tuesday. This subdued activity in the derivatives market mirrors broader economic uncertainties.

This article serves as general information and should not be construed as legal or investment advice. The opinions expressed herein are solely those of the author and do not necessarily reflect the views of any affiliated organizations.

Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.