Bitcoin derivatives release cautious signals, market liquidity and depth significantly decrease, bullish confidence still insufficient.

Although the price of Bitcoin has rebounded from near $60,000 and approached the $70,000 mark, signals from the derivatives market indicate that traders are still leaning towards a defensive stance, with a new round of bullish bets not clearly emerging. Data shows that the funding rate of Bitcoin perpetual contracts, which reflects the exchange of funds between long and short parties, is still below the zero axis. This bearish trend indicates that market participants are still positioning for downside risks, or requiring compensation to hold long positions. At the same time, the open interest of Bitcoin perpetual contracts has not recovered from the decline since October last year, highlighting the lack of confidence behind this rebound. According to Coinglass data, the current open interest has dropped by about 51% from the peak in October. Even as Bitcoin rebounded from near $60,000 to over $70,000, there is still no sign of a recovery in open interest. Andy Martinez, CEO of Crypto Insights Group, stated that since the crash on October 10th, market liquidity and depth have noticeably decreased, leading investors to reduce leverage and adopt more conservative trading strategies, "the market is still digesting everything that happened after October 10th." The slump in derivatives comes after a sharp volatility last week. Bitcoin fell to around $60,000 last Thursday, the lowest level since October 2024, before quickly rebounding to over $70,000 on Friday. However, the price fell back below $70,000 on Monday, highlighting the continued fragility of the market sentiment. The options market is also sending cautious signals. The implied volatility of Bitcoin has dropped significantly from around 83% last Thursday to about 60% currently, indicating a decrease in the market's expectation of short-term large fluctuations. However, the position structure still leans towards defense. Griffin Ardern, Head of Research and Options Trading at BloFin, pointed out that the skewness of 25-delta call/put options still significantly favors put options, reflecting investors' strong demand for downside protection. Ardern stated that the impact of leverage on prices has significantly weakened, which helps reduce volatility and stabilize prices, but this also means that many investors choose to take profits or stop losses at lower levels, move to a wait-and-see position, or even partially exit. In his opinion, a market environment dominated by bearish sentiment is more likely to lead to consolidation and ranging, rather than quick rebounds. Macro-level uncertainties are also reinforcing cautious sentiment in the market. Le Shi, Managing Director of Auros Hong Kong, stated that despite the market seemingly finding support in the latter half of last week, participants remain extremely cautious due to several potential events that could "shake up the market." These risks include changes in the Japanese political situation, volatility in the precious metals market, and concerns about the rise of AI concept stocks.