Bitcoin futures and options signal investors’ confidence was not meaningfully impacted by BTC’s recent dip to $61,500.
The 13.3% drop in Bitcoin (BTC) price between April 12 and April 13 forced many traders out, primarily those who had leveraged their positions. This significant movement triggered $387 million in forced liquidations of long positions and reduced the open interest by $5.4 billion. At first glance, the price action and its effect on the derivatives markets suggest a decreased risk appetite.
Yet, cryptocurrency traders are accustomed to volatility and often overreact during uncertain times. A closer examination is necessary to determine whether the retest of $61,500 was sufficient to instill fear or to signal that the path to $72,000 and a potential all-time high after the Bitcoin halving is now less probable.
Despite the modest recovery to $63,500 on April 15, the overall sentiment among traders has dampened, making it challenging to support the narrative of Bitcoin as 'digital gold’. Additionally, the price movement exposed weaknesses in the spot Bitcoin ETF, particularly as holders were unable to sell over the weekend. This situation demonstrated the limitations of indirect exposure to Bitcoin through such instruments.
