Key takeaways:
Bitcoin reclaimed $68,000 as President Trump hinted at ending the Iran War even if the Strait of Hormuz remained partially closed.
Bitcoin derivatives data show high fear, with put options at a premium and low demand for bullish leveraged trades.
Bitcoin (BTC) rallied to $68,000 on Monday following the gains in the S&P 500 after US President Donald Trump suggested that the administration may consider ways to end the US and Israel-Iran war without a full reopening of the Strait of Hormuz. However, Bitcoin traders have kept a bearish stance according to derivatives metrics, indicating little confidence that the $66,000 level will hold for much longer.
S&P 500 futures (left) vs. Bitcoin/USD (right). Source: TradingView
Bitcoin’s momentary dip to $66,000 occurred on the same day that Google research analysts claimed that the elliptic curve discrete logarithm problem (ECDLP) could be cracked with 20 times less quantum computing power. However, some traders quickly realized that the entangled logical physical qubits needed for a successful attack remain far-fetched, given the equipment currently in existence.
Bitcoin 2-month futures annualized premium. Source: Laevitas.ch
The Bitcoin monthly futures contracts annualized premium relative to regular spot markets stood at 2% on Tuesday, flat from the prior week. Numbers below 4% indicate a lack of demand for bullish leverage as shorts (sellers) typically demand a premium to compensate for the longer settlement period. More importantly, not even the price rally above $71,000 on Wednesday was able to make investors feel bullish.
Bitcoin derivatives show limited demand for bullish leverage
Bitcoin price signaled strength by holding above $66,000 for the past week while the S&P 500 plummeted to its lowest level in 7 months on Monday. Crude oil prices surged above $100 on Friday and this act cautiously. Expectations for monetary policy easing in the US dropped sharply over the past month as the pressure on fuel prices drove inflation upward.
Interest rate target probabilities for the July FOMC meeting. Source: CME FedWatch Tool
Traders now anticipate less than 10%…
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