Strong investor demand for weak Bitcoin futures coincides with falling prices

Bitcoin (BTC) failed to break above $71,000 on Thursday, partly due to the decline in the US stock market, and the BTC funding rate fell deeper into negative territory.

Key considerations:

• Bitcoin bears are showing high confidence as funding levels decline, but steady institutional buying is keeping sellers in check.

• Gold and government bond yields are rising, making it harder for Bitcoin to compete as a high-end store.

Bitcoin futures imply moderate market pressure

Traders fear that a protracted war in Iran could wreak havoc on energy markets and adversely affect the already weak outlook for the global economy.

Perpetual Bitcoin futures have shown signs of moderate pressure, indicating a possible test of $66,000. However, institutional inflows are showing increased demand, reducing the likelihood of a major Bitcoin price correction.

The year-to-date rate on Bitcoin fixed income futures fell to -7% on Thursday, meaning shorts (sellers) were paying to keep their positions open.

The growing belief of the bears is worrying, but the lack of demand from Londoners (buyers) should not be surprising, as Bitcoin is 45% below its all-time high.

Bitcoin derivatives remain silent

The tech-heavy Nasdaq 100 index was just 6% off its all-time high on Thursday. Even the U.S.-listed small-cap Russell 2000 index was 9% off its high.

Therefore, worsening economic conditions or fears of contagion due to logistical problems in the Middle East can be used to justify Bitcoin’s weakness.

According to Yahoo Finance, the latest U.S. jobless data released on Thursday showed 1.85 million new claims ended in the week of February 28, slightly more than consensus.

US President Donald Trump has vowed to “finish the job” in Iran, a war that will further weaken the government’s debt conditions and not help the outlook for the labor market.

The monthly Bitcoin futures premium over the regular spot markets has been below the neutral threshold of 5% for the past two weeks. However, despite being distant, there is no evidence that Bitcoin derivatives are currently showing continued pressure.

This lack of interest is a reflection of Bitcoin’s failure to rally despite predictions of monetary expansion.

Increased institutional demand could push BTC above $75,000

Gold’s strength above $5,100 is undermining Bitcoin’s value stock, especially as US bond yields rose sharply in March, meaning traders are demanding more income to hold the instrument.

The yield on the 5-year US Treasury rose to 3.80% on Thursday after falling to 3.50% in late February. Thus, investors exited fixed income investments.

related to: Bitcoin refers to gold as an “opportunity at risk”.

The US Federal Reserve is in a difficult position as interest rate cuts are needed to boost the labor market and reduce risks in credit markets. But the rise in oil prices creates a steady upward pressure on inflation.

Currently, Bitcoin’s heavily encrypted and transparent monetary policy is not considered a safe haven, but this may change as institutional demand grows.

Additionally, one metric of Bitcoin derivatives (funding rates) should not be interpreted as a driver for a sudden price correction.

In particular, between the net income sequence of the Bitcoin exchange-traded fund (ETF) and the Strategy (MSTR USA) of the product, which leads to the acceleration of the accumulation of Bitcoin. Sellers below $75,000 will eventually run out of coins, paving the way for a sustained bull run.

As Cointelegraph reported, Bitcoin bulls will likely have to wait until after March for a chance to break the $78,000 resistance.