Even if Bitcoin rebounds and approaches $70,000, Bitcoin derivatives are still sending out warning signs. Traders are still adopting a defensive layout and almost no new bullish bets are seen. Funding rates for Bitcoin’s perpetual futures contracts — the fees long and short parties pay each other — remain below zero. This bearish pattern suggests traders are still bracing for downside risk or are demanding compensation before taking long exposure.
At the same time, the size of open interest in Bitcoin perpetual futures has failed to break away from the downward trend since October, highlighting the lack of confidence support for this round of rebound. According to data from Coinglass, the metric is down 51% from its October peak.
Although Bitcoin rebounded from nearly $60,000 towards $70,000, open interest showed no signs of recovery on Monday.
“Since the plunge on October 10, market liquidity and depth have declined significantly, which has prompted investors to reduce leverage bets and act more conservatively,” said Andy Martinez, CEO of Crypto Insights Group. “The market still seems to be trying to digest everything that has happened since October 10.”
The options market is sending similar signals. Bitcoin’s implied volatility has fallen sharply, from about 83% on Thursday to about 60% currently, indicating that the market’s expectations for large price fluctuations in the short term have significantly reduced. But positioning indicators remain defensive.
As of press time, Bitcoin was trading at $69,422.