Bitcoin bucks downtrend with rally to $85.8K — Are BTC bulls really back?

Bitcoin Sentiment Dims as Stock Market Ties Dent Bullish Momentum

Uncertainty Surrounding Trade Tensions Impacts Bitcoin Markets

The recent movement in the Bitcoin (BTC) market has been shaped by the ongoing trade tensions between the US and China. The announcement of partial import tariff relief by US President Donald Trump on April 13 initially boosted traders’ optimism, causing the price to reclaim the $84,500 level. However, this sentiment was short-lived, as the relaxation was revealed to be temporary, and tariffs on the electronics supply chain could be revisited.

Premium on Bitcoin Monthly Futures Contracts Dives

The premium on Bitcoin monthly futures contracts peaked at 6.5% on April 11 but has since dropped to 5%, which is near a neutral to bearish threshold. Sellers typically require a 5% to 10% annualized premium for longer settlement periods, indicating reduced interest from leveraged buyers.

Traders’ Sentiment Mirrors Stock Market Trends

The strong intraday correlation between Bitcoin and stock markets has dampened bullish enthusiasm, leaving open questions about whether this effect is limited to BTC futures. The performance of broader markets, particularly large technology companies reliant on global trade, appears to have influenced Bitcoin sentiment.

BTC Options Markets Suggest Limited Bullish Sentiment

To determine whether Bitcoin traders’ sentiment is merely mirroring trends in the S&P 500, it is helpful to examine the BTC options markets. If professional traders anticipate a significant price drop, the 25% delta skew indicator will rise above 6%, signaling put (sell) options becoming more expensive than call (buy) options. On April 13, the Bitcoin options delta skew briefly dipped below 0%, signaling mild optimism, but this momentum did not hold on April 14, reinforcing data from Bitcoin futures that show no significant bullish sentiment.

Weak Spot Bitcoin ETF Inflows Contribute to Traders’ Limited Optimism

Another way to gauge market sentiment is by analyzing stablecoin demand in China. Strong retail interest in cryptocurrencies usually pushes stablecoins to trade at a premium of 2% or more above the official US dollar rate. In contrast, a premium below 0.5% often indicates fear as traders move away from crypto markets.

Conclusion

The recent movement in the Bitcoin market has been shaped by the ongoing trade tensions between the US and China. The announcement of partial import tariff relief by US President Donald Trump on April 13 initially boosted traders’ optimism, but this sentiment was short-lived. The strong intraday correlation between Bitcoin and stock markets has dampened bullish enthusiasm, and the premium on Bitcoin monthly futures contracts has dropped, indicating reduced interest from leveraged buyers.

FAQs

Q: What is the current sentiment in the Bitcoin market?
A: The current sentiment is one of caution and limited optimism, with traders showing little confidence in Bitcoin surpassing $90,000 in the near term.

Q: What is driving the current movement in the Bitcoin market?
A: The ongoing trade tensions between the US and China and the strong intraday correlation between Bitcoin and stock markets are driving the current movement in the Bitcoin market.

Q: What is the current state of the premium on Bitcoin monthly futures contracts?
A: The premium on Bitcoin monthly futures contracts has dropped to 5%, which is near a neutral to bearish threshold.

Q: What is the current state of the 25% delta skew indicator in the BTC options markets?
A: The 25% delta skew indicator briefly dipped below 0% on April 13, signaling mild optimism, but this momentum did not hold on April 14, reinforcing data from Bitcoin futures that show no significant bullish sentiment.