Bitcoin’s current 20% drop over the past four days has put the price at its lowest level in nine months and while these movements might seem extraordinary, quite a number of large listed companies and commodities faced a similar correction.
Federal Reserve reverted its expansionary incentives and now aims to reduce its balance sheet by $1 trillion.
Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.
Even with the above data, the recent 20% price correction was not enough to drive this metric below the 2% threshold, which should be interpreted as positive.
To exclude externalities specific to the futures contracts, traders should also analyze the options markets.
In short, the indicator will turn positive when “fear” is prevalent because the protective put options premium is higher than the call options.
The above chart shows that Bitcoin option traders have been signaling “fear” since April 8 after BTC broke below $42,500.
Despite some recent Bitcoin borrowing activity aimed at betting on the price downturn, margin traders remain mostly optimistic, according to the USDT/BTC lending ratio.
According to derivatives metrics, Bitcoin traders are afraid of a deepening correction as macroeconomic indicators deteriorate.