Bitcoin Derivatives Market Hits Record Bearish Discount as BTC Nears All-Time Highs

Bitcoin (BTC) traders in the derivatives market are showing notable signs of caution, even as the cryptocurrency approaches its all-time high prices. New data from on-chain analytics platform CryptoQuant reveals that Bitcoin derivatives are currently trading at a record discount, highlighting the bearish sentiment prevailing among investors.

As of January 24, Bitcoin’s derivatives market on Binance showed a staggering $62.40 discount compared to its spot price. This gap is the largest ever recorded, pointing to a growing disconnect between Bitcoin’s current price and future market expectations. Contributor Darkfost attributes this shift to macroeconomic concerns, particularly recent US inflation data and the Federal Reserve’s projections regarding interest rates and inflation.

Bitcoin spot-perpetual price gap (screenshot). Source: CryptoQuant

“Investor behavior has been significantly influenced by the latest US macroeconomic indicators, such as the Consumer Price Index (CPI) and Producer Price Index (PPI),” Darkfost explains. “These figures, combined with expectations for future rate cuts, are shaping sentiment in the market.”

Despite Bitcoin trading just under $5,000 away from its all-time high, the derivatives market remains hesitant. CryptoQuant notes that the widespread aversion to derivatives trading reflects a lack of conviction in the market, which is a stark contrast to typical behavior during bullish cycles. Historically, when spot prices are higher than derivative prices, it often signals a buying opportunity as market sentiment tends to overreact.

Further, a critical support level for Bitcoin’s price is emerging at $89,900. According to CryptoQuant analyst Yonsei Dent, this threshold is vital for short-term holders (STHs), as a drop below this price would push many investors into a net loss. The $90,000 mark remains crucial, with volatility expected to intensify as Bitcoin approaches this support level.

Bitcoin STH realized price data. Source: CryptoQuant

As Bitcoin’s price action continues to make headlines, traders and investors alike should keep a close eye on these technical and on-chain indicators to gauge the potential for significant price movements.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.

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