Bitcoin ready to fall: Market fears decline

important point:

  • The preference for put options indicates a bearish outlook for Bitcoin.
  • The continued outflow of GBTC underlines the recovery in the cryptocurrency market.
  • The contradiction between Bitcoin pullback and stock market optimism.

Investors are adjusting their strategies amid the possibility of an extended decline in the value of Bitcoin, including this cryptocurrency, as evidenced by changes in demand for exchange-traded funds (ETFs) in the United States. The bias towards puts over calls in the last 24 hours suggests expectations of a near-term decline.

Market Outlook according to Deribit

According to data from Deribit, a well-known crypto options exchange, Bitcoin put options expiring on March 29 have overtaken call options in volume, increasing the put-to-call ratio. This key indicator points to bearish sentiment in the market, with put option strike prices concentrated around 50,000 and 45,000. Currently Bitcoin is trading around 63,500.

“The market correction today is largely due to the ongoing withdrawals from GBTC,” David Lavant, head of research at FalconX, explains. Looking at spot ETF net inflows year-to-date shows a significant decline, which is the second series of outflows since the launch of these products on January 11.

Bitcoin has seen a decline of more than 10% from its all-time high, marking one of the most significant pullbacks this year. According to CoinGlass, the trend signals potentially massive outflows from spot Bitcoin ETFs, with over 177 million bullish positions liquidated over the past 24 hours.

Compare with stock market

As Bitcoin faces a decline, the stock market is moving higher on expectations that the Federal Reserve will cut interest rates this year. “We saw digital assets also react to the positive macro tailwinds around the FOMC”says Chris Newhouse, DeFi analyst at Cumberland Labs. However, the weakness in correlation with stocks suggests the influence of product-specific factors on the decline of BTC and ETH.

Financing Rates and Settlements

Funding rates for perpetual futures, an indicator of leverage levels in crypto trading, remain low following the recent selloff. This suggests that Bitcoin’s current decline may not be as severe as previous occasions. However, Monday saw Bitcoin’s decline accelerate, with over 582 million long positions liquidated, bringing total liquidations to over 738 million.

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