Bitcoin Surges to $61,000 But Derivatives Markets Give Conflicting Signals
Bitcoin (BTC)'s price surged 6.4% in less than 12 hours on September 17, breaking through the $61,000 level for the first time in three weeks.
The recent price increase does appear to be closely linked to broader economic factors, particularly following the release of stronger-than-expected macroeconomic data. Such positive news has raised the odds of a 0.50% interest rate cut by the US Federal Reserve on September 18, which is usually friendly to risk assets like Bitcoin.
According to the Census Bureau, US retail sales rose a mere 0.1% month-over-month in August, while industrial production was up a more convincing 0.8%, boosted by a rebound in the automotive sector. These numbers have taken some steam out of recession worries, especially for the consumer sector, which has come under pressure due to higher financing costs.
However, despite the price rally, the derivatives paint a picture of cautiousness. The premium for Bitcoin futures, one of the most important indicators of market sentiment, has stabilized at 6% - just above the neutral level of 5%. That would suggest that while there's some optimism, investors remain wary of fully embracing the bullish trend.
The options market tells a similar story. The 25% delta skew-a measure of the pricing of put and call options-currently stands near 2%, meaning that traders are pretty neutral, with neither bullish nor bearish expectations leading the market.
With the Federal Reserve's decision slated for September 18, traders seem not to want to add to positions. Markets currently pricing US Treasury markets are showing the probability of a 0.50% interest rate cut at 63%, up significantly from 34% a week ago, according to the CME FedWatch Tool.
