Professional Bitcoin Traders Are Cautiously Bullish Despite BTC's 14% Correction

Bitcoin price corrected 14%, falling to $59,300 after reaching an all-time high (ATH) of $69,170 on March 5. Fortunately, the price has rebounded to $64,176 at the time of writing. The challenge now lies in maintaining support at $64,000. According to BTC derivatives data, professional traders maintain a mildly bullish stance despite the current short-term volatility.

Interestingly, Bitcoin's correction coincided with the tech-heavy Nasdaq-100 index futures retracing 2.6%, reaching an all-time high of 18,377 on March 4. The stock market showed early signs of stress after a consumer research firm estimated that Apple's iPhone sales in China were down 24%.

Furthermore, shares of New York Community Bancorp (NYCB) continued to fall after the lender replaced its CEO, citing “fundamental weaknesses” in internal controls. So investors sought refuge in gold as the precious metal rose 4.2% in four days, now trading near an all-time high.

Bitcoin reaching a new ATH has attracted media attention, potentially causing whales to consider Shorting (bearish bets) or encouraging holders to reduce their positions in response to the FUD commonly seen from Bitcoin critics.

For example, the funding rate for Bitcoin perpetual contracts attracted attention when it surpassed 1% weekly on February 28. However, this metric shows investor optimism over the past few months, as Bitcoin user Munger on X pointed out:

“The bears will say: “Trust me, man. Funding rate is positive. We will have a major correction at any moment.” Meanwhile, the funding rate has been like this for over a year.”

Professional Bitcoin traders are not too excited about ATH

In essence, it is almost unreasonable to suggest that the sharp Bitcoin price correction is simply due to the funding rate, as this metric can remain above 1% per week for long periods of time without necessarily forcing the bulls to retreat. close Long order. Some traders do not have access to traditional funding, while others simply do not care about fees due to favorable market conditions.

Furthermore, retail traders are not the factor causing the market to overheat, as investors naturally exhibit bullish tendencies. In contrast, professional traders often prefer monthly futures contracts to avoid variable funding rate costs. In neutral markets, these instruments trade at spreads of 5% to 10% to account for extended settlement periods.

Data reveals that BTC futures spreads were at 15% during the entire $5,765 price move on March 5. Essentially, the metric signals whales and market makers remain bullish despite the post-ATH correction, showing little difference if $62,000 or $64,000 becomes support. Furthermore, BTC futures spreads did not exceed 20% even during the ATH period, implying a cautious bullish sentiment among traders.

To rule out external factors that may only impact the futures market, we should also evaluate Bitcoin options metrics. A 25% delta skew is a notable indicator when arbitrage desks and market makers charge too much for up or down price protection.

As described above, the 25% delta skew is currently at -7%, placing it at the threshold between a neutral and bullish market. Notably, the last instance of Bitcoin options traders getting too excited was on February 19, when the indicator reached -12%. Therefore, the options market is supporting the view that professional traders remain unconvinced that Bitcoin will surpass $70,000 anytime soon.

Traditionally, in times of uncertainty, investors tend to seek shelter in short-term bonds and cash. This rationalizes the lack of excessive optimism as Bitcoin reaches its all-time high.

However, this time may be different, as inflows into the spot Bitcoin ETF have gained some capital from gold. This suggests the possibility that BTC prices can maintain upward momentum regardless of how traditional markets perform.

Bitcoin fell about 6% from a new all-time high on Tuesday as strong selling on cryptocurrency exchanges limited price gains beyond $69,000.

Order books on crypto exchange Binance show large sell orders clustered at higher prices, with over 300 BTC, worth around $20 million, sold at $69,000 and over 500 BTC sold at $70,000.

Selling pressure puts a significant barrier on bitcoin's price, causing the cryptocurrency to decline. After briefly setting an all-time record of $69,208, BTC dropped more than $1,000 in a minute and then fell to as low as $64,700.

According to Markus Thielen, head of research at 10x, Bitcoin (BTC) will reach a new all-time high (ATH) before the end of the week.

Thielen said in a note titled “Everyone will be surprised by Bitcoin's price action this week:

“Price action over the weekend is always important to watch, and although efforts were made to liquidate leveraged long positions, there were no sellers.”

Among other bullish signs, Thielen noted a significant drop of 63,000 BTC held on exchanges over the past 30 days. Coinbase alone, he said, saw its balance drop from 400,000 BTC to 372,000 BTC in just one month.

That's not all there is to US ETFs either, Thielen emphasized. He reminded that BlackRock just launched a spot ETF in Brazil last week and volumes in Korea have exploded to $8 billion per day for five consecutive days, while previously it was just under $1 billion.

As outflows from Grayscale's GBTC product spiked last Thursday and Friday and BlackRock's IBIT inflows slowed, Thielen expects inflows into the BlackRock product to continue this week.

“Cash flow is not drying up because investors feel more confident as prices move higher. If Grayscale's cash flow drops below $100 million, Bitcoin will surge,” Thielen said.