By Chris Hollingworth 
Bitcoin Struggles to Break Above $105,000 Amid US Macroeconomic Headwinds
Bitcoin (BTC) has faced challenges in surpassing the $105,000 level since May 10, raising concerns among traders about the sustainability of bullish momentum. While BTC managed to reclaim the $104,000 mark, a decline in demand for leveraged long positions has been observed, reflected in the drop in the Bitcoin futures premium.
On May 14, the annualized Bitcoin futures premium hit a peak of 7% but subsequently decreased to 5%, nearing the neutral-to-bearish threshold. This level is comparable to what was seen four weeks ago when BTC was trading around $84,500. The reduced appetite for leveraged bullish positions seems to be linked to broader macroeconomic uncertainties, with Bitcoin’s price closely following movements in the stock market.
The rebound in S&P 500 futures on May 15 coincided with Bitcoin’s bounce from $101,800 to $104,000. This rebound was driven by growing investor confidence in potential liquidity injections by the US Treasury following warnings from Federal Reserve Chair Jerome Powell about prolonged higher interest rates due to supply shocks.
Economic indicators also point to potential weaknesses, with the US Bureau of Labor Statistics reporting a 0.5% drop in April’s Producer Price Index against expectations of a 0.2% increase. In addition, ongoing global trade tensions, particularly the temporary nature of the US-China tariff agreement, have dampened investor risk appetite.
The recent surge in demand for fixed income is evident in the decline of the 10-year US Treasury yield from 4.55% to 4.45% after reaching a peak on May 14. Historically, Bitcoin tends to perform better when government bond yields are rising, indicating reduced confidence in the Treasury’s debt management capabilities.
To gauge sentiment and potential price movements, analyzing Bitcoin options demand is crucial. Despite expectations of bearish sentiment, Bitcoin put options have been trading at a discount compared to call options, reflecting strong confidence in the $100,000 support level. However, the optimism seen on May 14 has waned, with the indicator now at a neutral -4%.
The likelihood of Bitcoin breaking above $105,000 hinges on macroeconomic trends, such as developments in the US Federal Reserve’s balance sheet and recession risks. The high correlation between Bitcoin and the S&P 500, which has persisted for over two months, further underscores the importance of monitoring macroeconomic indicators.
Notably, the $320 million net inflows into US Bitcoin exchange-traded funds (ETFs) on May 14 indicate sustained institutional demand. This shift highlights a changing perception of Bitcoin from a risk-on asset to a non-correlated instrument, potentially reducing the probability of sharp price corrections even without strong leveraged bullish positions.
Disclaimer: This article provides general information and is not intended as legal or investment advice. The opinions expressed are the author’s alone and may not necessarily reflect or represent other views.
