Bitcoin Falls Below $67K As Stocks Sell Off But BTC Derivatives Remain Stable

Bitcoin price experienced a sharp sell-off today, yet the BTC futures market shows no signs of fear.

Source: www.liputan6.com

On October 21, Bitcoin's price dropped to $67,000, wiping out gains from the past three days. Some analysts suggest the correction was driven by investors cutting back on Bitcoin exposure due to concerns about contagion from traditional markets. However, BTC derivatives metrics stayed remarkably stable. Despite worries that multiple economies may be slowing or that confidence in the government's ability to manage debt is weakening, demand for Bitcoin derivatives as a hedge remained steady. If whales or arbitrage desks had expected a further decline, these metrics would have shown greater volatility.

Bitcoin Futures Show No Signs Of Bearish Sentiment

The Bitcoin futures premium, typically ranging from 5% to 10% in neutral markets, saw only a minor impact on October 21. A higher premium in monthly BTC futures signals bullish sentiment when it exceeds 10%, reflecting the longer settlement period. On October 21, the annualized premium (basis rate) remained above 9%, even as Bitcoin tested the $67,000 support level. However, before drawing conclusions, it's essential to verify whether this sentiment was limited to Bitcoin futures markets. Based on price charts, Bitcoin's price action seemed to follow the intraday performance of the stock market.

Arif Husain, head of fixed income at T. Rowe Price, told Bloomberg that the U.S. 10 year Treasury yield is expected to test the 5% threshold in the next six months, driven by rising inflation expectations and concerns about government fiscal spending. As yields rise when investors sell bonds, traders are seeking higher returns. Husain also noted that the government plans to flood the market with new debt issuance, while the Federal Reserve is working to shrink its balance sheet to control inflation and prevent economic overheating. U.S. debt interest costs have surpassed $1 trillion annually, prompting the central bank to consider lowering interest rates.

Bitcoin Price Has Yet To Break Away From Stocks

Amid macroeconomic uncertainty, fear, uncertainty, and doubt (FUD) have had a significant impact on Bitcoin’s price trends. Although Bitcoin is often seen as uncorrelated to traditional markets occasionally showing complete detachment from the S&P 500 the 40-day correlation has stayed above 80% over the past month, signaling a strong alignment between the two asset classes. This contrasts with the period from mid-July to mid-September when Bitcoin and the S&P 500 showed either a negative or negligible correlation. Recent data suggest that both markets are being driven by similar factors, further supported by the growing correlation between Bitcoin and gold, which exceeded 80% on October 3.

Bitcoin options markets also support the resilience of derivatives. The 25% delta skew metric reveals that put (sell) options are trading at a discount to equivalent call (buy) options. A skew between -7% and +7% is typically considered neutral, and the current metric hovers around the boundary of a neutral to bullish market. In summary, derivatives traders did not panic during Bitcoin's recent price drop. If a further decline were expected, the skew would have moved toward zero or higher. Overall, Bitcoin derivatives continue to show resilience.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.