Bitcoin (BTC) Regains Ground as Market Remains Hesitant Despite the Rebound

Bitcoin has regained ground following last week's decline triggered by a brief political controversy, recovering to around $110,000.

Bitcoin price recovered some lost ground on Monday as the cryptocurrency attempted to stabilize following last week’s decline, which was triggered by a brief political controversy and set the asset up for a potential leg higher.

Many traders remained hesitant, showing caution even as Bitcoin traded within 2% of its all-time high around $110,000. A persistent atmosphere of “disbelief” was evident in key market indicators, with participants opting for risk-averse positioning ahead of macroeconomic data releases.

A recent report by K33 Research highlighted the lack of bullish conviction in the derivatives market, evident in negative funding rates and flat leveraged inflows. These conditions suggest that rather than a speculative rush, the rally may be driven by underlying demand.

Bitcoin Funding Data Reflects Conservative Positioning

According to K33 Head of Research Vetle Lunde, Binance’s BTC/USDT perpetual contracts registered negative daily funding rates on Friday and Sunday, while the weekly funding average was just 1.3% annualized, a level usually seen near local bottoms over the last two and a half years.

In such conditions, traders are generally paying to remain short, reflecting a prevailing bearish bias despite the price recovery. Lunde noted that such bearish sentiment could act as fuel for a future breakout.

Furthermore, data from the Volatility Shares 2x leveraged long Bitcoin ETF (NYSE:BITX) adds to the cautious narrative. The fund holds just 52,435 BTC in exposure, significantly lower than its peak of 76,755 BTC in December.

Unlike previous rallies in March and November 2024, recent inflows into BITX have remained largely flat over the past month, suggesting that traders are refraining from aggressive bullish exposure via leverage.

This defensive setup could lead to an unexpected surge if sentiment flips.

Ethereum Derivatives See Leverage Spike As ETF Flows Climb

While Bitcoin remains subdued on the leverage front, Ethereum markets are witnessing increased speculative activity. The Volatility Shares 2x leveraged Ethereum ETF (BSE:ETHU) has captured significant attention, becoming a dominant player in the ETH derivatives space.

Since April 8, ETHU has added over 305,000 ETH in exposure, exceeding the increase in CME ETH open interest during the same period, K33 noted.

ETHU now represents 18.3% of the ETH held by all US spot ETFs and about two-thirds of CME’s ETH open interest. In comparison, BITX makes up only 4.3% of US spot Bitcoin ETF holdings.

The sharp rise in ETHU positions suggests heightened demand for leveraged Ethereum exposure, even as similar activity is absent from the Bitcoin space. Lunde interpreted this as a signal of traders positioning for upward movement in ETH, potentially ahead of policy developments or fundamental catalysts.

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