Bitcoin (BTC) failed to sustain levels above $85,000 on March 14, even as the S&P 500 index recorded a 1.9% gain. The cryptocurrency has now spent over a week below the $90,000 mark, leading traders to speculate whether the bull market is losing steam and how long the selling pressure will persist. Bitcoin Derivatives Indicate Market Resilience Despite the 30% drop from its all-time high of $109,354 on January 20, Bitcoin’s derivatives market shows signs of resilience. The Bitcoin basis rate, which measures the premium of monthly contracts over spot markets, initially signaled bearish sentiment on March 13 but has since rebounded to healthier levels. Typically, traders expect an annualized premium of 5% to 10% to compensate for the longer settlement period. While the current basis rate sits at 5%—lower than the 8% recorded two weeks ago—it remains within neutral territory, indicating stable demand from leveraged buyers. Correlation with Traditional Markets Challenges Bitcoin’s Independence Bitcoin’s price movements have closely mirrored the S&P 500, raising concerns about its role as a non-correlated asset. If Bitcoin continues to track traditional financial markets, its price could remain under pressure due to ongoing fears of an economic recession. However, central banks are expected to introduce stimulus measures to prevent a downturn. If such measures take effect, scarce assets like Bitcoin could benefit significantly. According to the CME FedWatch tool, there is currently less than a 40% probability that U.S. interest rates will drop below 3.75% by the Federal Open Market Committee (FOMC) meeting on July 30. If the S&P 500 recovers some of its recent 10% losses, Bitcoin could regain the $90,000 level. On the other hand, prolonged risk aversion among investors may lead to continued underperformance. Bitcoin Derivatives and Margin Markets Show No Signs of Stress Market sentiment among professional traders appears stable, as evidenced by the 25% delta skew metric for Bitcoin options. This metric, which reflects the demand for put (sell) options relative to call (buy) options, remains within a neutral range. Typically, a bearish market would see this metric rise to a 6% premium, but there are currently no strong signals of such a scenario. Further analysis of margin markets at OKX reveals that the Bitcoin long-to-short ratio stands at 18:1. Historically, levels exceeding 40:1 indicate excessive confidence, while a ratio below 5:1 suggests bearish sentiment. The current balance mirrors market conditions from January 30, when Bitcoin was trading above $100,000. Given the lack of stress in Bitcoin derivatives and margin markets, combined with strong investor resilience, Bitcoin is expected to reclaim the $90,000 mark in the coming weeks, provided that recession risks subside.
