BTC Surges Past $71.5K Following Major Correction, Yet Derivative Indicators Show Weakness
Following an extraordinary downturn to $60,000, Bitcoin has rebounded, though futures market indicators reveal traders lack sufficient confidence to establish substantial bullish positions.
Key takeaways:
- Derivative markets for Bitcoin indicate heightened caution, with options skew reaching 20% amid concerns about additional rounds of institutional liquidations.
- While Bitcoin's value has reclaimed some ground lost during Thursday's decline, it continues to underperform compared to gold and technology equities in an environment characterized by minimal leverage appetite.
Since touching a bottom at $60,150 on Friday, Bitcoin (BTC) has climbed 17%, yet derivative market indicators point to persistent wariness as appetite for long exposure approaching $70,000 stays limited. Market participants harbor concerns that the forced closure of $1.8 billion worth of bullish leveraged futures positions over five days signals potential collapse among significant hedge funds or market-making entities.
In contrast to the Oct. 10, 2025, market crash that resulted in an unprecedented $4.65 billion liquidation event across Bitcoin futures markets, the current price weakness has featured three straight weeks of bearish momentum. Market bulls have continuously established positions throughout the $70,000 to $90,000 range, evidenced by rising aggregate futures open interest even amid aggressive contract liquidations triggered by inadequate margin requirements.
On Friday, the combined Bitcoin futures open interest across prominent exchanges reached 527,850 BTC, remaining essentially unchanged compared to the preceding week. While the dollar-denominated value of these contracts declined from $44.3 billion to $35.8 billion, this 20% reduction precisely mirrors the 21% depreciation in Bitcoin's price over that seven-day timeframe. Available data demonstrates that bullish traders have maintained their position-building activity throughout the continuous price deterioration.
For a more comprehensive assessment of whether institutional players and market-making firms have adopted a bullish stance, analysis of the BTC futures basis rate proves valuable, as this metric captures the pricing differential compared to standard spot market contracts. During normal market conditions, this premium typically falls within a 5% to 10% annualized range, serving as compensation for the extended settlement timeline.
On Friday, the BTC futures basis rate fell to 2%, marking its weakest reading in over twelve months. While the absence of appetite for leveraged bullish positions is somewhat anticipated, market bulls will require an extended period to rebuild their confidence even as Bitcoin's price advances beyond $70,000, particularly when considering that BTC remains 44% beneath its record peak.
Extreme Fear Reflected in Bitcoin Derivative Market Indicators
The absence of trader conviction regarding Bitcoin becomes equally apparent when examining BTC options market activity. Disproportionate demand for put (sell) option contracts serves as a powerful bearish signal, elevating the skew metric beyond 6%. In contrast, when fear of missing out dominates market sentiment, traders willingly pay elevated premiums for call (buy) options, resulting in the skew metric turning negative.
On Friday, the BTC options skew metric climbed to 20%, an extreme level that seldom sustains itself and generally signifies widespread market panic. As a point of reference, this skew indicator registered 11% on Nov. 21, 2025, in the aftermath of a 28% price correction down to $80,620 from the $111,177 summit achieved twenty days prior. Given the absence of any clear catalyst driving the present downturn, apprehension and uncertainty have organically escalated.
Market participants will probably persist in theorizing that a prominent market maker, cryptocurrency exchange, or hedge fund institution might have experienced insolvency, and such prevailing sentiment undermines conviction while suggesting elevated probability of additional downward price movement. As a result, the likelihood of maintaining sustained bullish momentum stays subdued as long as BTC derivative market metrics persist in reflecting extreme fear conditions.