How High Will Bitcoin Price Bounce Back ?

Between Caution and Euphoria : The Investor’s Dilemma

Bitcoin has experienced a spectacular rebound to $109,700, close to its all-time high. However, numerous data points suggest that professional traders remain cautious. They seem unconvinced by the current market momentum.

Source: laevitas.ch

• Bitcoin is trading just 2% below its all-time high. But derivatives indicators show traders’ reluctance to adopt a bullish sentiment.
• The reduction in stablecoin demand in China and net outflows from spot Bitcoin ETFs indicate persistent concerns about global trade tensions.

Bitcoin crossed the $109,000 mark on Wednesday. It had briefly tested support at $105,200 earlier in the day. This rise comes amid record monetary expansion in the eurozone. Signs of weakness in the U.S. job market are also notable.

Despite this impressive rally, traders remain cautious and unconvinced, according to Bitcoin derivative metrics. This reserved attitude is leading some investors to question the solidity of this recovery.

ECB Fuels BTC’s Rise

While it’s difficult to identify a single trigger, the record surge in money supply (M2) in the eurozone in April likely played a major role in Bitcoin’s rebound. Data released Monday revealed a 2.7% increase year-over-year, aligning with the expansionary trajectory of the U.S. monetary base. Meanwhile, ADP figures showed a decline of 33,000 private jobs in the United States in June.

Source: laevitas.ch

Some market participants attribute the low demand for long positions on Bitcoin to increased fears of economic recession, particularly in the face of escalating global trade wars. U.S. President Donald Trump has threatened to increase tariffs on Japanese products by more than 30% if no agreement is reached by July 9.

To assess whether the lack of enthusiasm is limited to futures contracts, it’s worth examining the Bitcoin options markets. If traders were anticipating a significant downturn, the 25% delta skew (the price difference between call and put options) should exceed 6%.

However, this indicator remains at 0%, unchanged for two days, suggesting that traders perceive balanced risks on both sides. While this reflects mixed sentiment at the $109,000 level, it’s still an improvement compared to the bearish positioning observed on June 22.

Meanwhile, the sharp decline in the stablecoin premium in China indicates falling demand for cryptocurrencies in the country. The discount of Tether relative to the U.S. dollar typically signals fear and a willingness to exit crypto markets. This 1% discount is the largest since mid-May, reflecting a lack of confidence in Bitcoin’s recent gains.

Increased Caution Amid Trade Tensions

Traders appear increasingly concerned about the consequences of the ongoing trade war, particularly following net outflows of $342 million from spot Bitcoin ETFs on Tuesday. This moderate activity in the derivatives market reflects broader macroeconomic uncertainty, pushing investors toward caution despite Bitcoin’s rebound.

The coming weeks will be decisive in determining whether Bitcoin can maintain this renewed momentum or potentially face a trend reversal in the face of geopolitical tensions.

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