Bitcoin (BTC) price dipped to $67,000 on Oct. 21, erasing the gains from the previous three days. According to some analysts, one reason for the correction was investors reducing their Bitcoin exposure due to fears of contagion from traditional markets. However, BTC derivatives metrics remained notably stable.
Even with concerns that numerous economies might be losing momentum or that confidence in the government’s ability to refinance debt is weakening, demand for Bitcoin derivatives as a hedge remained steady. If whales or arbitrage desks anticipated further decline, these metrics would have reflected more volatility.
Bitcoin futures show no signs of bearish bets
The Bitcoin futures premium, which typically ranges between 5% and 10% in neutral markets, saw only a slight impact on Oct. 21. The higher pricing of monthly BTC futures reflects the extended settlement period and signals bullish sentiment when the premium exceeds 10%.
Bitcoin 2-month futures annualized premium. Source: laevitas.ch
The annualized premium (basis rate) remained above 9% on Oct. 21, even as Bitcoin retested the $67,000 support level. However, before drawing conclusions, it’s important to confirm whether this sentiment was isolated to Bitcoin futures markets. Based solely on price charts, it appears that Bitcoin's price movement mirrored the intraday performance of the stock market.
S&P 500 futures (green) vs. Bitcoin/USD (blue). Source: TradingView
Arif Husain, head of fixed-income at T. Rowe Price, told Bloomberg that the US 10-year Treasury yield “will test the 5% threshold in the next six months,” driven by rising inflation expectations and concerns over government fiscal spending. Yields increase when investors sell their bonds, indicating that traders are seeking higher returns.
Husain noted that the government will “flood” the market with new debt issuance, while the Federal Reserve is attempting to shrink its balance sheet to curb inflation and prevent the economy from overheating. The US debt interest costs have surpassed $1 trillion on an annualized basis, prompting the central bank to consider lowering interest rates.
Bitcoin price has yet to decouple from stocks
Amid uncertainty in the macroeconomic environment, fear, uncertainty, and doubt (FUD) have significantly influenced Bitcoin’s price trends.
While Bitcoin is often viewed as uncorrelated to traditional markets—having demonstrated periods of complete detachment from the S&P 500—the 40-day correlation has remained above 80% over the past month, indicating that both asset classes have moved in close alignment.
Bitcoin 40-day correlation vs. S&P 500 futures. Source: TradingView
Unlike the period between mid-July and mid-September, when Bitcoin and the S&P 500 exhibited either a negative or negligible correlation, recent data suggest that both markets are being driven by similar factors. This hypothesis is further supported by the increasing correlation between Bitcoin and gold, which surpassed 80% on Oct. 3.
Related: Bitcoin ETF liquidity set to surge after SEC options approval — QCP
Bitcoin options markets also reinforce the thesis of derivatives resilience. The 25% delta skew metric shows that put (sell) options are trading at a discount compared to equivalent call (buy) options.
Bitcoin 1-month options skew, put-call. Source: Laevitas.ch
Typically, a skew between -7% and +7% is considered neutral, and the current metric sits at the borderline of a neutral to bullish market.
In short, derivatives traders did not react with panic to Bitcoin’s recent price decline. If traders were expecting further downside, the skew would have shifted toward zero or higher. Overall, Bitcoin derivatives continue to demonstrate resilience.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.