Key takeaways:
- Bitcoin’s funding rate has risen to 7%, showing confidence, but spot ETF outflows keep the breakout at $70,000 for now.
- Strong order book offerings and lower oil prices helped, but weakness in stocks, bonds and gold signals a preference for cash.
Bitcoin (BTC) flirted with the $65,500 level on Monday after US Vice President JD Vance said the Strait of Hormuz remains open amid “encouraging progress” in talks with the Iranian delegation in Switzerland. Bitcoin traders have shown signs of optimism with rising demand for bullish leveraged positions, which raises the question of whether $70,000 will be next.
Bitcoin Perpetual Futures Annual Funding Rate. Source: Lightness
The one-year funding rate for bitcoin perpetual futures rose to 7% on Monday, the highest level in almost three weeks. While still in the neutral 6%-12% range, the indicator reflects growing confidence among bulls. Some of the optimism was likely due to the decline in Brent crude oil prices to $77.50, the lowest level since March.
Brent crude oil, USD (left) vs. Nasdaq 100 futures (right). Source: TradingView
The Nasdaq 100 index dropped a modest 1% as shares of artificial intelligence companies weakened. Shares of SpaceX (SPCX US) fell 13% after the company announced plans to escalate debt despite having more than $100 billion in cash. Investors fear the sector will need more investment for a longer period of time before it becomes profitable.
Bitcoin Options Premium Paid Indicator in Deribit, USD. source: Laevitas
Demand for puts (puts) more than doubled on Monday, signaling stronger demand for downside price protection. Since Friday, the indicator has been leaning towards a bearish strategy, reversing the trend from the previous week.
The strategy alleviates concerns, but stocks and bonds signal increased risk
Some of traders’ concerns stemmed from weakness in Strategy’s (STRC US) valuation. Strategy shares were trading 13% below the $64.1 billion acquisition cost of 847,363 BTC. Despite carrying a comfortable $6.75 billion in debt, investors were concerned that the company would have to sell reserves. These concerns eased somewhat when Strategy announced the $300 billion figure additional cash item.
Aggregated Bitcoin order book 1% liquidity delta, USD. Source: CoinGlass
Bids in Bitcoin order books on major exchanges exceeded bids by $12 million on Monday, reversing the weekend trend. As such, Bitcoin’s failure to hold the $65,000 level should not signal weakness, especially since the gold price fell 0.9% on Monday as investors sold U.S. government bonds.
Related: Bitcoin reached its highest price of 66,000. dollars when the trader signaled “suspicious” increases in BTC prices
Gold/USD (left) vs. 5-year US Treasury bond yield (right). Source: TradingView
Higher U.S. Treasury yields signal that investors have demanded higher returns from holding these bonds, whether that is due to inflation or expectations of dilution from rising U.S. government debt levels. The simultaneous frail performance of stocks, bonds and gold indicates a preference for cash positions, creating a cautious backdrop for Bitcoin.
After six weeks of outflows, frail demand for US-listed Bitcoin Exchange Funds (ETFs) continues to weigh on investor sentiment. Bitcoin spot ETFs netted $228 million outflows from the previous week– according to CoinGlass data. Therefore, the chances of Bitcoin rising to $70,000 in the tiny term seem constrained.
