Bitcoin (BTC) Hit $97900, But Futures Pricing Shows Market Makers Aren't Confident in a Sustained Rally

BTC hit $97900 due to soaring institutional investor demand, but futures pricing shows traders aren't confident in a sustained rally.

Bitcoin (BTC) broke out of a tight trading range between $93,000 and $95,600 on May 1, following six days of limited movement. As the crypto hit its highest price in ten weeks at $97,930 on May 1, derivatives indicators showed neutral sentiment.

This price action follows significant net inflows into US spot exchange-traded Bitcoin (BTC) funds (ETFs), with $3.6 billion flowing into the products over the past two weeks. However, traders have displayed some disappointment as the macroeconomic outlook remains uncertain and global trade tensions are heating up again.

Bitcoin traders are wary that despite the growing interest from institutional investors, fears of an economic recession could hamper BTC's performance, reducing the chances of it reaching $110,000 or higher in 2025.

To put this in perspective, the annualized premium for Bitcoin's two-month futures has remained between 6% and 7% over the past week, staying within the neutral range of 5% to 10%. In January, when Bitcoin was trading near $95,000, the futures premium was above 10%.

Bankless: Bitcoin derivative data: a complete guide to futures premiums, options and more

This data, together with the lack of conviction in further price gains toward $100,000 and above, suggests less optimism, or at least less conviction.

Some market participants are also noting gold's 20% rally, which saw prices rise from $2,680 to $3,220. This compares to Bitcoin's modest gains and marks a significant move for the world's most valuable asset.

Investors are concerned that Bitcoin's strong correlation with the stock market has diminished the appeal of its "digital gold" narrative.

There is also the possibility that the $3.6 billion in net inflows to US spot ETFs over the past two weeks are being driven by delta-neutral strategies. In this scenario, the flows reflect Bitcoin holders moving to listed products or using derivatives for hedging.

If so, the direct impact on price would be limited, which aligns with Bitcoin's 5% gain during this period.

To ascertain whether professional traders are comfortable with Bitcoin around $97,500, it's useful to examine the BTC options market.

The BTC options 25% delta skew metric is currently at its lowest level since Feb. 15, indicating that whales and market makers are assigning higher odds to further upside from here. This marks a sharp reversal from three weeks ago, when put (sell) options traded at a premium.

Overall, Bitcoin derivatives indicate moderate optimism. Traders generally expect further price gains, but bulls are refraining from using leverage. Some might argue that this creates the ideal conditions for a surprise rally, especially since the retest of $74,500 on April 9 did not significantly affect BTC derivatives.

The most important factor influencing Bitcoin's performance remains the commercial relationship between the US and China. As long as the trade war continues, Bitcoin is likely to continue tracking the S&P 500 movements. While this environment may prevent Bitcoin from reaching a new all-time high in the near term, BTC derivatives are currently leaning slightly in favor of the bulls.