By Chris Hollingworth 
Bitcoin (BTC) faced resistance above $85,000 on March 14, failing to hold onto gains despite a 1.9% increase in the S&P 500 index. Traders are now questioning the longevity of the bull market as it has been over a week since Bitcoin last reached $90,000. This has led to concerns about ongoing selling pressure and the overall market sentiment.
Despite a significant 30% drop from its all-time high of $109,354 on Jan. 20, Bitcoin derivatives metrics have shown resilience. The Bitcoin basis rate, which measures the premium of monthly contracts over spot markets, has rebounded from bearish levels. Traders typically look for a 5% to 10% annualized premium in contracts to compensate for longer settlement periods. While the current 5% rate is lower than levels seen two weeks ago, it remains within neutral territory.
Bitcoin’s price movements have mirrored those of the S&P 500, indicating a correlation with traditional market factors. This challenges the notion of Bitcoin as a non-correlated asset, at least in the short term. However, with central banks expected to implement stimulus measures to prevent a recession, scarce assets like Bitcoin may outperform in this environment.
Market participants are closely monitoring the S&P 500’s performance, with hopes that a recovery in the stock market could help Bitcoin reclaim the $90,000 level. However, continued panic selling of risk-on assets could lead to prolonged underperformance for Bitcoin, particularly if spot Bitcoin exchange-traded funds (ETFs) continue to see significant outflows.
In the derivatives market, professional traders are not actively hedging with Bitcoin options, as indicated by the 25% delta skew metric. This suggests that few expect Bitcoin to revisit recent lows around $76,900. The neutral range of the 25% delta skew reflects a healthy derivatives market sentiment.
Examining BTC margin markets provides insight into trader sentiment. Unlike derivatives, margin markets allow traders to borrow stablecoins to buy Bitcoin or borrow BTC to open short positions. The current long-to-short margin ratio at OKX shows long positions outweighing shorts by 18 times, reflecting a level of confidence similar to that seen when Bitcoin was trading above $100,000 in late January.
Overall, there are no significant signs of stress or bearish sentiment in Bitcoin derivatives and margin markets, which is reassuring for investors following recent market volatility.
