Bitcoin (BTC) struggled to sustain levels above $85,000 on March 14, despite a 1.9% gain in the S&P 500 index. With more than a week since Bitcoin last traded at $90,000, traders are questioning whether the bull market is fading or if further downside pressure will persist.
From a derivatives market perspective, however, Bitcoin is showing strong resilience despite a 30% drop from its all-time high of $109,354 on Jan. 20.
Bitcoin Basis Rate Signals Recovery
The Bitcoin basis rate, which measures the premium of monthly contracts over spot markets, has rebounded after briefly flashing bearish signals on March 13.
- Bitcoin’s 2-month futures contracts currently hold an annualized premium of 5%, compared to 8% two weeks ago.
- While lower than previous highs, this rate still falls within a neutral demand range, signaling healthy market sentiment.
Traders typically seek an annualized premium between 5% and 10% for longer settlement periods. A drop below this range suggests weak demand from leveraged buyers, but Bitcoin’s recovery above 5% indicates continued investor confidence.
Bitcoin’s Correlation with Traditional Markets
Bitcoin’s price action has mirrored the S&P 500, indicating that macroeconomic trends continue to influence cryptocurrency movements.
While Bitcoin is often considered a non-correlated asset, its recent movements have aligned with traditional markets, particularly amid concerns over a potential economic recession.
If fears of a recession persist, investors may shift toward safer assets like bonds, reducing exposure to risk-on investments like Bitcoin. However, central banks are expected to introduce stimulus measures, which could drive Bitcoin’s value higher as a scarce asset.
Derivatives and Margin Markets Show No Signs of Stress
Despite recent volatility, Bitcoin derivatives metrics do not indicate major bearish sentiment:
- Bitcoin’s 25% delta skew, which measures demand for put (sell) options versus call (buy) options, remains within the neutral range. This suggests that traders are not aggressively hedging against downside risks.
- Bitcoin’s long-to-short margin ratio at OKX shows long positions outweighing shorts by 18 times. Historically, extreme confidence has pushed this ratio above 40 times, while bearish periods see it drop below five times.
- The absence of significant bearish bets suggests that traders do not expect Bitcoin to retest the $76,900 level in the near future.
Will Bitcoin Reclaim $90,000?
Analysts suggest that Bitcoin could revisit $90,000 as soon as the S&P 500 recovers some of its recent 10% losses. However, sustained bearish momentum in traditional markets could lead to further selling pressure on Bitcoin, particularly if spot Bitcoin ETFs experience continued outflows.
Despite this, Bitcoin’s resilience in derivatives and margin markets—combined with potential easing of recession fears—suggests that the cryptocurrency could reclaim $90,000 in the coming weeks.
