The Bitcoin futures contract premium bottomed out for 3 months despite the strong capital influx from BTC ETFs.

Although Bitcoin is currently trading around $103,300 – 8% lower than its all-time high – derivative indicators show that market sentiment is shifting towards a negative direction. Cryptocurrency investors, especially those using leverage, are known for their quick and extreme reactions. However, the current lack of optimism seems unusual compared to previous cycles.

Impact of macro instability or market psychology?

The BTC price drop to $102,400 could stem from concerns about the unstable socio-economic environment, or from internal market factors. Typically, monthly Bitcoin futures have a price that is 5–15% higher than the spot market to compensate for the expiration time. However, since June 12 — after being rejected in the $110,000 zone — the level has consistently remained below the neutral level, dropping to less than 4% on June 20, the lowest level in three months.

It is noteworthy that the current futures contract index is even lower than during early April, when BTC dropped sharply by 10% in just 24 hours to $74,440.

The options market also shows increasing pessimism

For a more comprehensive assessment, it is possible to look at the index of deviations in the options market. When investors are concerned about the risk of falling prices, the put option will have a higher fee, pushing the deviation beyond the 5% mark. During the optimistic period, the index is usually below -5%. Currently, the deviation is at 5%, indicating that market sentiment is oscillating between neutral and pessimistic. This is in stark contrast to June 9, when the index touched -5% after a price bounce from $105,500 to $110,500 – indicating increasingly obvious investor frustration.

25% delta deviation of Bitcoin options at Deribit | Source: Laevitas.chMeanwhile, the Russell 2000 index – representing the group of small-cap stocks in the US – maintains the 2,100 point support level despite geopolitical tensions in the Middle East and interest rates staying above 4.25% amid inflationary pressures.

The Russell 2000 index (left, green) compared to Bitcoin/USD (right) | Source: TradingView## Institutional capital continues to flow in despite the weakening derivatives market

Contrary to the pessimistic sentiment of the derivatives trading community, institutional investors continue to show strong confidence. In the 30 days ending June 18, Bitcoin spot ETFs in the U.S. attracted over $5.14 billion in net inflow. Many companies such as Strategy, Metaplanet, H100 Group, and The Blockchain Group have also accumulated a significant amount of BTC during this period.

However, it is still unclear what could restore the market's confidence. And if the price of BTC continues to fluctuate around the psychological level of $100,000, the bears may increasingly gain the upper hand.

Mr. Teacher