Key Takeaways

• Bitcoin options and futures data suggest traders are neutral amidst a recent 7% price drop.
• Stablecoin demand in China remains steady, showing marginal fear in crypto markets.

Technical Correction Wiped Out Derivatives

Bitcoin (BTC) dropped approximately 4% between Thursday and Friday, falling below the $115,000 mark for the first time in two weeks. This correction coincided with the monthly derivatives expiry, which resulted in nearly $390 million worth of futures contracts expiring, equivalent to approximately 14% of open interest.

Futures Data Point to Neutral Sentiment

To assess the impact of this event on longer-term expectations, analysis focuses on Bitcoin futures and options indicators.

Under typical conditions, monthly Bitcoin futures trade at a 5% to 10% annualized premium over spot markets. The current 7% premium falls within a neutral range, near the level observed the previous Monday (8% premium). This suggests, at first glance, no significant shift in investor sentiment despite Bitcoin’s recent $4,700 price drop.

Bitcoin previously reached a record high of $123,181. A prior period when bullish futures momentum was detected was February earlier. This timing occurred prior to the U.S. imposing import tariffs and alongside disappointment over the Federal Reserve maintaining interest rates, despite a relatively moderate January CPI reading.

Options Skew Returns to Near Normal After Brief Spike

To gauge whether the neutral stance in futures accurately reflects sentiment, the BTC options skew is examined. An anticipated correction typically sees put (sell) options commanding a premium compared to call (buy) options, lifting the 25% delta skew above 6%.

On Friday, as Bitcoin fell, the 25% delta skew surged dramatically to 10%, reaching a rare “stress level” last seen nearly four months ago. However, the elevated fear sentiment was fleeting as the skew quickly reverted to a balanced 1% level. This signals that major players and market makers are pricing similar risks for both upward and downward price moves.

Monitoring 80,000 BTC Wallet Transfers

Derivatives data implies, cautiously, that traders are neither particularly eager to buy near the $116,000 price point nor panicked following the peak day drop. This is somewhat reassuring, especially considering concerns surrounding the entity that unloaded around 80,000 BTC, as noted by Nansen CEO Alex Svanevik.

China Stablecoin Demand: Early Indicator of Crypto Confidence?

Additional insights are drawn from stablecoin demand in China. Strong retail activity typically drives stablecoins (like USDT) to trade at a 2% or higher premium relative to the official US dollar rate. A discount greater than 0.5%, conversely, often signals market fear.

Currently, Tether (USDT) in China is trading at a modest 0.5% discount, indicating that Bitcoin’s recent dip has not significantly impacted overall cryptocurrency demand there. Even during Bitcoin’s record climb above $123k, stablecoin flows have remained largely unchanged.