While bitcoin seemed to be starting a rebound at the start of the year, the momentum abruptly stalled. Around $88,000, the asset is struggling to convince, hampered by a climate of political and monetary uncertainty. Institutional investors are slowing down, cooled by the tensions in Washington and the wait-and-see attitude of the Fed. If certain indicators reveal an upward trend, the signals coming from derivatives markets tell another story: that of a market which doubts, observes and waits.
In brief
- Bitcoin marks a halt around $88,000, held back by an uncertain political and economic context.
- Institutional investors are reducing their exposure, futures and options data shows.
- The fall in the premium on futures and the rise in put options signal a decline in bullish confidence.
- The threat of a federal shutdown in the United States is pushing markets towards safe haven assets, to the detriment of Bitcoin.
Market professionals are scaling back
The derivatives market provides clear indicators of a decline in risk appetite among the most seasoned investors.
Despite a recent rebound in Bitcoin around $88,000, institutional operators do not seem inclined to support further upside. Data extracted from exchange platforms reveals a significant decline in the premium on futures contracts. Thus, the annualized premium on three-month Bitcoin futures contracts fell to 9%, compared to 13% a week earlier.
Several elements confirm this climate of caution:
- A fall in the premium on futures contracts: the tightening of the premium suggests that market participants are no longer paying to secure long positions, which reflects a loss of confidence in a rapid rise in price;
- The stagnation of institutional positions on the CME: data from the Chicago Stock Exchange do not record a significant recovery in net long positions, showing a wait-and-see attitude among professionals;
- Overvalued puts: Puts for levels below $80,000 are trading at a higher premium, signaling an anticipation of a correction;
- The unbalanced put/call ratio: the marked interest in put options reflects an increased desire to hedge against potentially downward volatility.
Technical signals converge towards the same reading: institutional investors are opting for caution and preferring to position themselves on the margins, in a climate where bullish catalysts are neither obvious nor immediate.
The macroeconomic environment redirects flows
Beyond the internal dynamics of the crypto market, macroeconomic forces weigh on the trajectory of bitcoin. Among them, the prospect of a federal shutdown in the United States plays a role as a catalyst for uncertainty.
Concerns are growing about Congress's ability to pass a budget bill on time, and markets are responding by moving toward assets perceived to be more stable. Indeed, this American institutional tension contributes to the current wait-and-see attitude on the crypto market: the specter of a federal shutdown is fueling a rotation towards safe havens.
In addition, the other point of tension comes from American monetary policy. Anticipations of decisions by the Federal Reserve are slowing down risk-taking, in a context where any indication of tightening could increase selling pressure on volatile assets.
Thus, traders are waiting for clear signals from the Fed regarding interest rates, which delays bitcoin positions. At the same time, gold reached a historic high, capitalizing on this quest for security which benefits traditional financial instruments.
In a climate fraught with uncertainty, the price of bitcoin reflects the growing tensions between hopes of recovery and investor caution. Between Fed policy and the risk of a shutdown, market signals call for reserve.
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