Bitcoin Rallies to $61K, but Traders Remain Cautious
Bitcoin’s price surged by 6.4% within 12 hours on September 17, breaking through the $61,000 mark for the first time in three weeks. Despite this rise, the data from derivatives markets shows a lack of improvement in sentiment, causing concern among Bitcoin bulls. The critical question remains: will Bitcoin sustain its position above $60,000 or fall back to $58,000?
Market Reaction to Economic Data
The spike in Bitcoin’s price coincided with the S&P 500 index hitting an all-time high, driven by stronger-than-expected macroeconomic data. U.S. retail sales increased by 0.1% in August, while industrial production grew by 0.8%, mainly due to a rebound in motor vehicles and parts. This economic activity lessened fears of a looming recession, particularly in the consumer sector, which had been troubled by rising financing costs.
Some analysts argue that the stock market is in a bubble, inflated by high valuations of technology companies and excessive financial leverage. Cracks have already started appearing in the commercial real estate market. Recent economic data, however, has somewhat mitigated the risk of a stock market correction.
As of now, U.S. Treasury markets are pricing in a 63% probability of a 0.50% interest rate cut by the Federal Reserve, up from 34% the previous week. Nevertheless, Stephen Juneau, a senior U.S. economist at Bank of America Securities, suggests that the recent data has not significantly changed the Fed’s economic outlook.
Bitcoin Derivatives Indicate Skepticism
To gauge whether Bitcoin traders have turned bullish, examining the BTC futures premium, or basis rate, is essential. In neutral markets, these instruments trade at an annualized premium of 5% to 10%, accounting for their extended settlement period. Currently, the Bitcoin futures premium has stabilized at 6% after nearing the neutral 5% level on September 16. Despite the price rally from $57,675 to $61,330, investor sentiment remains cautious.
To further assess sentiment, one should look at the Bitcoin options skew metric. When arbitrage desks and market makers overcharge for downside protection, the 25% delta skew metric tends to rise above 6%. Conversely, periods of excitement typically show a negative 6% delta skew. Currently, the BTC options 25% skew stands near 2%, indicating that put (sell) options are priced similarly to call (buy) options. This neutral sentiment has persisted for the past week and was last outside this range on September 6, when Bitcoin briefly traded below $54,000.
Demand for Stablecoins in China
Another important indicator is the demand for stablecoins in China, which serves as a proxy for traders entering or exiting cryptocurrency markets. The USD Tether (USDT) premium measures the difference between the value of USDT in peer-to-peer transactions and the official U.S. dollar exchange rate in yuan. Data reveals that demand for stablecoins in China remains weak, with Tether trading at a 0.3% discount since September 9, suggesting that investors have been cashing out.
Investor Sentiment Ahead of Federal Reserve Decision
Overall, derivatives data indicate that Bitcoin investors are not enthusiastic, even as BTC flirts with the $61,000 level. Traders remain skeptical that the bullish momentum will continue, especially with the Federal Reserve’s decision on September 18 looming. Many are hesitant to add positions, waiting for more clarity on the economic front.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
