The Bitcoin（BTC）price continued its correction on July4,dropping3.34%in the last24hours and5.82%in the lastweek.Meanwhile,the total market capitalization has dropped by4.23%over the last24hours to rest at$2.13trillion at the time ofpublication.The42%leap in the total trading volume is testimony to thesell-sideintensity in the cryptomarket.
Points
- Bitcoinpricedroppedby3.34%in24hoursand5.82%inthelastweek.
- Totalmarketcapitalizationfellby4.23%to$2.13trillion.
- Tradingvolumeincreasedby42%,indicatingintensesell-sidepressure.
BitcoinPricePlungedWhiletheS&P500andGoldCloseinonAll-TimeHighs
TheS&P500index achieved a newall-timehigh on July3,and gold remained just under4%shy of its record$2,450high on May19.The surge in the stock market has been driven by corporate earnings surpassing expectations and the growing anticipation of interest rate cuts by the United States Federal Reserve throughout2024.This scenario underscores that the downturn in the cryptocurrency market is unrelated to the broader demand forrisk-onassets or alternativeinvestments.
Moreover,the United States5-yearTreasury yield has stayed at4.33%for the past fourweeks,indicating no movement toward“flight-to-quality,”where investors typically flock to saferassets.This trend would typically lead to a decrease inyields,as demand forgovernment-backedbonds rises and inflation fears push traders to seek higherreturns.However,none of these shifts have materializedrecently,leavingBitcoin’s19%four-weekslide without backing from broader macroeconomictrends.
Despite intense sellingpressure,Bitcoin whales and market makers have shownresilience,as evidenced by two key derivativesmetrics.
BitcoinDerivativesMetricsStayNeutralasStablecoinDemandinChinaIncreased
Professional traders often favor monthly contracts because they do not involve a fundingrate.In a neutralmarket,these contracts usually trade at a premium of5%to10%to compensate for their extended settlementperiods.
Bitcoin 2-monthfuturespremiumrelativetospotmarkets.Source:Laevitas.ch
The data indicates that the BTC futures premium fell to7.5%on July4but remained within the neutralterritory.Notably,it last exceeded the10%bullish threshold on July2,but this only lasted for less than fourdays.The current futures premium closely resembles the period between June21and June24,following a12-dayprice correction of15%.
Bitcoin 2-monthoptionsdeltaskew.Source:Laevitas.ch
Currently,the BTC options25%delta skew is at0%,showing balanced pricing between call（buy）and put（sell）options.Although this represents a decrease in confidence compared to the previousweek’s-5%,it still falls within the neutralrange.Essentially,there appears to be no urgent demand for hedging through Bitcoinoptions.
To understand if the diminished interest in Bitcoin futures mirrors broader marketsentiment,it’suseful to look at the demand for stablecoins inChina.Normally,high retail demand for cryptocurrencies causes stablecoins to trade at a premium of2%or more above the officialU.S.dollarrate.Conversely,a discount usually signals bearmarkets.
USC Coin（USDC）peer-to-peertradesvs.USD/CNY.Source:OKX
The premium forChina’sUSDC stablecoin dropped below1%on June28,suggesting a rush to liquidate cryptocurrencyholdings.However,this trend reversed on July4,with the premium returning to a more neutral1.8%.This rebound suggests a recent surge in buying activity as traders convert fiat CNY intostablecoins.
WrappingUp
The crypto market is currently facing intense sellingpressure,with Bitcoin prices experiencing significantdeclines.Despitethis,key derivatives metrics indicate a neutral marketsentiment,with stablecoin demand in China showing signs ofrecovery.Investors should closely monitor these trends and be cautious of potential further marketdeclines.
This article does not contain investment advice orrecommendations.Every investment and trading move involvesrisk,and readers should conduct their own research when making adecision.