Even though Bitcoin's price rose above $112,000, market sentiment remains cautious, as evidenced by several key metrics.
Options Skew: The Bitcoin options delta skew is at 9%, with put (sell) options priced higher than call (buy) options. This indicates that traders are buying protection against a potential price drop, signaling risk aversion and a preference for bearish or neutral strategies.
Futures Funding Rates: The perpetual futures funding rate is at a neutral 11%, which is a slight improvement from the previous week but still shows a lack of strong bullish conviction. This suggests that traders aren't willing to pay a premium to hold long positions.
External Factors Weighing on Sentiment
Several external events are contributing to the lack of enthusiasm among Bitcoin traders.
Spot ETF Outflows: Spot Bitcoin ETFs experienced $383 million in net outflows over a two-day period. This withdrawal of capital from the market has likely unnerved investors and is a major factor weighing on sentiment.
Corporate Reserve Competition: Ether (ETH) is gaining traction as a corporate reserve asset, with companies allocating an additional $200 million to it. This new competition from another major cryptocurrency may be drawing some attention away from Bitcoin.
Strategic Index Decision: The exclusion of Strategy (MSTR) from the S&P 500 rebalance is another possible reason for the muted sentiment among Bitcoin bulls, as it removes a potential catalyst for institutional interest.
Unlikely Rally to $120,000
Given the current data, a significant rally to $120,000 seems improbable in the near term. The current skepticism reflected in both the options and futures markets suggests that a strong price push lacks the necessary momentum. A potential shift in sentiment would likely require spot Bitcoin ETFs to stabilize their outflows.
