Bitcoin derivatives turn bearish as traders anticipate sub $60K BTC price

Bitcoin derivatives data suggests that macroeconomic and crypto-specific factors are behind BTC’s recent drop below $60,000.

• Bitcoin price dropped 5.8% between June 23 and June 24, reaching its lowest level in seven weeks at $59,700.
• $153 million in leveraged long BTC futures was forcefully liquidated due to insufficient margin.
• Derivatives metrics have shifted to a neutral sentiment, ending a bullish trend that had lasted five weeks.

Concerns surrounding a selloff from Mt. Gox and the German government

Traders are now questioning whether the worsening crypto market conditions indicate a longer bear market or a momentary panic due to miners being forced to cover expenses amid lower profitability and the potential sale of large stashes by known entities. Should traders wait for a dip to $57,500 or increase their positions during this period of fear, uncertainty, and doubt?

Some analysts raised concerns after the failed exchange Mt. Gox bankruptcy estate announced the imminent repayment in Bitcoin. Anonymous influencer fejau stressed that the disbursement announcement could have been anticipated by insiders, which explains the recent price weakness.

On May 28, 2024, Mt. Gox transferred 141,686 BTC worth $8.6 billion, marking the first movement from the collapsed exchange in over five years. The trustee has confirmed that a “portion of cryptocurrency rehabilitation claims” will be released in July 2024.

Bitcoin derivatives signal weaker conditions, but likely exaggerated by the FUD

In this scenario, characterized by a moderate degree of fear, uncertainty, and doubt (FUD), Bitcoin traders have become increasingly risk-averse, especially after the BTC price plunged 16% since June 7, when it last approached the $72,000 level.

Data reveals that the BTC futures premium dropped to 8% on June 22, below the 10% threshold for a bullish sentiment. The indicator had previously peaked at 16.5% on June 7 but has worsened each week as Bitcoin’s price failed to show strength.

The demand for hedge using protective puts is the main reason behind the BTC options put-to-call volume ratio reaching 0.75 on June 24. This level still favors call options by 35%, but it represents a decrease from the prior week’s average of 80%.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.