While inflation has been surging worldwide, the first signs of an economic downturn showed as the United Kingdom’s retail sales fell 1.4% in March.
This bearish macroeconomic scenario can partially explain why Bitcoin has been on a downtrend since early April.
Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.
The above chart shows that Bitcoin option traders have been signaling “fear” since April 8, just as BTC broke below $42,500 following a 10% drop in four days.
On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price decline.
The above chart shows that traders have been borrowing more Bitcoin recently, as the ratio decreased from 20 on April 30 to the current 12.5.
Bitcoin traders fear further correction as macroeconomic indicators deteriorate because investors expect a potential crisis impact on riskier markets.