Bitcoin ended the week under pressure as investors turned to safer assets amid renewed trade tensions between the United States and China and broader market weakness. Despite robust flows into Bitcoin exchange-traded funds (ETFs), derivatives data suggests traders remain cautious about the sustainability of current price levels.
In brief
- Bitcoin is falling from a record $126,000 as investors turn to gold and bonds amid renewed trade tensions between the United States and China.
- Flows into ETFs exceed $5 billion in October, but derivatives show traders doubt Bitcoin's ability to hold above key supports.
- Gold hits a record high at $4,050, reflecting increased demand for safe-haven assets.
- Despite record flows into ETFs, Bitcoin remains volatile, with macroeconomic headwinds and inflation fears weighing on sentiment.
Bitcoin Loses Momentum After New High
After hitting a new all-time high on Monday, Bitcoin struggled to maintain its bullish momentum. Still, institutional demand appears strong, with more than $5 billion in spot ETF net flows so far in October, underscoring continued interest from large investors.
However, derivatives indicators such as options skew and funding rates suggest uncertainty over Bitcoin's ability to sustain above support levels. At the time of writing, OG coin is down over 8% in the past 24 hours to $110,982 as market sentiment turns bearish.
Meanwhile, gold climbed to an all-time high near $4,050 on Wednesday, reflecting growing investor demand for safe-haven assets. The rally came as concerns over U.S. fiscal stability deepened and economic growth slowed. Billionaire investor Ray Dalio warned that rising U.S. debt was a “ threat to the monetary order “.
Markets turned volatile after U.S. President Donald Trump accused China of imposing new port taxes on rare earth exports and threatened to raise tariffs in response. The S&P 500 fell 1.9% as fears of an escalating trade war weighed on global stocks and technology stocks.
Although Bitcoin is often considered “digital gold,” its performance remains closely tied to risk sentiment in traditional markets. The 40-day rolling correlation between Bitcoin and the S&P 500 is 73%. This highlights the importance of macroeconomic factors in crypto market behavior.
Traders Take Defensive Posture as Derivatives and Bond Markets Send Warning Signals
Investor caution is also visible in the bond market. Yields on one-year U.S. Treasuries fell to 3.61%, their lowest level in more than three years, as investors seek safety amid persistent inflation.
The U.S. personal consumption expenditures (PCE) index rose 2.7% year-over-year in August, its highest level in six months. As expected, this has raised concerns about a possible pick-up in inflation in 2026 as new import duties come into force.
The Bitcoin options market reflects a similar level of caution among participants. The 30-day delta skew increased to 8% Friday, indicating that traders pay a premium for downside protection. Recall that the last time this metric showed optimism was in mid-July, following a 13% two-week rally.
Furthermore, monthly Bitcoin futures are trading at a 7% premium to spot prices, with no notable change over the week. In bull markets, this premium often exceeds 10%as demand for leveraged long positions increases. This stable level suggests that trader confidence has yet to be restored, even after Bitcoin's 14% rally between September 28 and Tuesday.
Stablecoin flows in China offer additional insight into trader sentiment. Tether (USDT), which often trades at a premium or discount — an indicator of market stress — was slightly below parity at the start of the week, indicating outflows from crypto markets. However, after Bitcoin fell below $120,000, the discount reversed, suggesting that the selling pressure has calmed for now.
Flows into Bitcoin ETFs soar, but traders remain cautious amid macroeconomic headwinds
Momentum behind Bitcoin ETFs is gathering pace, with capital flowing into spot products at a record pace.
Here are some notable developments in the Bitcoin ETF industry:
- The BlackRock iShares Bitcoin Trust (IBIT) now holds over 800,000 BTC, almost 4% of the circulating supply of Bitcoin
- Additionally, it has now surpassed $100 billion in assets under management for the first time since its launch.
- Spot Bitcoin ETFs saw $4 billion in new flows over the past week, marking nine straight days of inflows and signaling strong institutional demand.
- Despite IBIT's strong performance, the funds collectively saw a net outflow of $4.5 million on Friday.
- Bitcoin's spot price remains under pressure, hovering around $117,600, down 2.56% on the day and almost 4% on the week, despite continued flows into ETFs.
Although these investment vehicles have performed strongly in recent weeks, market sentiment remains subdued. Ongoing macroeconomic risks — including trade tensions, inflation concerns and slowing growth — continue to affect sentiment. Derivatives data indicates continued hesitancy among traders, suggesting Bitcoin could see even more volatility before regaining clear bullish momentum.
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