Bitcoin remains stuck in a sluggish phase, with derivatives positioning and ETF flows pointing to soft demand, even as improving macro conditions provide a potential tailwind.
The largest cryptocurrency by market value, Bitcoin (BTC), was trading around $68,000 at press time, struggling to generate sustained upside momentum despite a sharp retreat in its key volatility gauge.
Data from Volmex show bitcoin’s 30-day implied volatility — a widely watched measure of expected price swings and investor anxiety — has fallen to an annualized 52%. Earlier this month, that figure surged from about 48% to nearly 100% as prices tumbled toward $60,000, reflecting intense demand for downside protection during the sell-off.
The sharp drop in implied volatility suggests that panic-driven hedging has eased. Options, which function as insurance against price fluctuations, become more expensive when traders aggressively seek protection. A call option allows traders to benefit from upside moves, while a put option provides protection against declines. As demand for such contracts cools, implied volatility typically declines.
Analysts at Bitfinex said the pullback in implied volatility signals that deleveraging pressure is fading and markets are stabilizing. However, stabilization has not yet translated into renewed bullish momentum.
Bitcoin’s rebound from its Feb. 6 low near $60,000 has stalled below the $70,000 mark, underscoring fragile demand. Funding rates in perpetual futures — periodic payments between long and short traders that keep contract prices aligned with spot — remain only marginally positive. That indicates a slight bullish bias but no meaningful appetite for aggressive re-leveraging.
In perpetual futures markets, positive funding rates mean long positions are paying shorts, reflecting bullish positioning. Negative rates imply the opposite. The current near-neutral readings suggest traders are cautious rather than conviction-driven buyers.
Institutional flows tell a similar story. U.S.-listed spot bitcoin exchange-traded funds have recorded net outflows of roughly $678 million so far this month, according to SoSoValue, extending a three-month streak of redemptions and highlighting subdued institutional participation.
Still, macroeconomic trends may offer support.
Recent data showed U.S. inflation continuing to cool, with January’s consumer price index rising 2.4% year-on-year, down from 2.7% in December. The softer reading has bolstered expectations that the Federal Reserve could deliver at least two 25-basis-point rate cuts this year.
Meanwhile, the inflation-adjusted yield on the U.S. 10-year Treasury note has fallen to around 1.8%, its lowest level since early December. Declining real yields tend to improve the appeal of non-yielding assets like bitcoin by reducing their opportunity cost relative to interest-bearing instruments.
Bitfinex analysts noted that lower real yields diminish bitcoin’s carry disadvantage, while a weaker U.S. dollar can enhance global liquidity — both factors that could ultimately help risk assets regain footing.
For now, however, derivatives metrics and ETF flows suggest that while panic has faded, conviction has yet to return.
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