Derivatives Market Data Shows Investors Still Leaning Towards Caution, Bullish Momentum Yet to Emerge

BlockBeats News, February 9th, even as Bitcoin rebounded to near $70,000, its derivatives market continues to flash a warning signal. Traders are still holding a defensive position, with little to no signs of new long bets.

Bitcoin's perpetual contract funding rate (the fee paid between long and short holders) remains below zero, indicating a bearish pattern where traders are still positioning for a downside move or are only willing to hold long exposure with compensation.

Meanwhile, Bitcoin perpetual futures' open interest has failed to recover since declining from its peak in October last year, highlighting a lack of confidence in the recent rebound. Coinglass data shows that the current open interest is down 51% from the October peak.

Despite Bitcoin bouncing back from nearly $60,000 to around $70,000, there has been no sign of a recovery in open interest on Monday. "Since the market crash on October 10th, liquidity and market depth have significantly decreased, prompting people to reduce leveraged bets and take more conservative actions," said Andy Martinez, CEO of Crypto Insights Group. "I believe the market is still trying to understand everything that has happened since October 10th."

Griffin Ardern, Director of Research and Options Trading at BloFin, stated that the options market is also telling a similar story. Bitcoin's implied volatility has dropped significantly from about 83% last Thursday to around 60% currently, indicating a reduced expectation of significant price swings. However, the positioning indicator still leans defensive. The skew of 25-delta put-call options (a measure of whether fear or greed dominates option pricing) still heavily favors put options, indicating strong demand for downside protection.

"Leverage's impact on market prices has significantly decreased, helping to reduce volatility and stabilize prices," Ardern added, "but this also means that many investors are taking profits or cutting losses at relatively low levels, moving to a wait-and-see position, or even temporarily exiting the market." He further pointed out that a market dominated by bearish sentiment usually signifies consolidation rather than a rapid rebound.

An intense macro agenda has also reinforced the market's cautious sentiment. "Despite the seeming late-week market support, due to the plethora of potential events that could impact the market, participants remain extremely cautious," said Le Shi, Managing Director of Market Maker Auros Hong Kong. He listed risks including developments in the Japanese political situation, volatility in the precious metals market, and concerns about an AI-driven stock market rally.