Important points:
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Derivatives data shows limited confidence among Bitcoin traders despite strong ETF inflows, with downside risk a constant concern.
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Soaring gold prices and falling U.S. Treasury yields highlight growing investor anxiety as fiscal stress and trade tensions weigh on trader sentiment.
Bitcoin (BTC) has struggled to regain any bullish momentum since reaching an all-time high of $126,219 on Monday. While solid inflows into spot Bitcoin exchange-traded funds (ETFs) indicate solid institutional demand, weakness in BTC derivatives indicators suggests traders remain uncertain whether the $117,000 level can be sustained.
Monthly Bitcoin futures are trading at a 7% premium compared to the spot market, with little change throughout the week. During periods of high optimism, this premium typically exceeds 10% as demand for long leveraged positions increases. However, even after Bitcoin rose 14% from September 28th to October 7th, the indicator remained at roughly the same level as a month ago, and the data shows that trader confidence has not improved.
Bitcoin lags as gold hits record amid US-China tensions
Gold prices soared to a record high near $4,050 on Wednesday, showing investors seeking safety as the United States faces a fiscal crisis and slowing economic growth. According to Bloomberg, Ray Dalio, a prominent portfolio manager and billionaire investor, said the risks posed by soaring U.S. debt pose a “threat to the financial order.”
US President Donald Trump has accused China of imposing new port fees on exports of rare earth minerals and threatened to “significantly increase” Chinese import tariffs in response. The S&P 500 index fell 1.9% as investors grew concerned that escalating trade war tensions could hurt corporate earnings, particularly in the artificial intelligence sector.
Although Bitcoin is often considered a type of digital gold, its correlation with the S&P 500 is still significant, with a current 40-day correlation of 73%. Traders’ risk appetite appears to be heavily influenced by concerns about an impending stock market decline, a view supported by strong demand for Treasury bills.
The yield on the one-year Treasury note fell to 3.61%, near its lowest level in more than three years, showing investors are accepting lower returns despite continued inflationary pressures. The U.S. personal consumption expenditure index rose 2.7% in August from a year earlier, the highest level in six months, and analysts expect price increases to accelerate in 2026 as import tariffs take effect.
Bitcoin options delta skew rose to 8% on Friday, indicating that traders remain concerned about the downside risk to the price. Interestingly, the last time this index showed optimism was on July 18, when it posted a 13.4% rise in two weeks. This suggests that the factors suppressing Bitcoin bullish sentiment have been present for quite some time.
Demand for stablecoins in China provides valuable insight into trader positioning. If investors are in a hurry to exit the crypto market, stablecoins typically trade at a discount of 0.5% or more compared to the official USD/RMB rate.
Related: Banks considering issuing stablecoins linked to G7 currencies
Tether has been trading at a slight discount since Wednesday, suggesting traders have been cashing in for some time as Bitcoin struggles to maintain its bullish momentum. However, after BTC fell below $120,000, the indicator returned to parity, indicating that traders are no longer keen on exiting the crypto market.
Despite an impressive $5 billion in net inflows into Bitcoin spot exchange-traded funds (ETFs) so far in October, confidence remains subdued as macroeconomic risks remain elevated. BTC derivatives indicators show that traders remain hesitant to turn bullish, leaving room for Bitcoin prices to fall further.
This article is for general informational purposes only and is not intended to be, and should not be taken as, legal or investment advice. The views, ideas, and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.