- Bitcoin options markets reflect the highest level of fear in a year, with traders bracing for a deeper selloff.
- The cryptocurrency plunged 10% this week, retesting the $81,000 support level amid significant spot ETF outflows.
- Investor anxiety is compounded by long-term concerns over quantum computing’s threat to blockchain cryptography.
- Massive liquidations of leveraged long positions have purged excess risk, potentially leading to a more stable market.
- Stablecoin demand metrics in China suggest moderate, though improving, capital outflows from the crypto sector.
Bitcoin traders grappled with extreme fear this week as the cryptocurrency’s price sharply corrected. The drop retested the $81,000 level for the first time in over two months, data shows.
This selloff coincided with $2.7 billion in net outflows from U.S. spot Bitcoin ETFs since January 16. Meanwhile, Gold prices also retreated 13% from their recent all-time high.
Consequently, market participants questioned the strength of key psychological support. Some worry institutional demand has stalled, while others note gold’s performance may be temporarily overshadowing Bitcoin.
One primary source of broader anxiety is the potential threat posed by quantum computing. Coinbase recently formed an independent advisory board to evaluate these cryptographic risks.
The debate intensified after Jefferies removed Bitcoin from its flagship portfolio, citing these security concerns. However, Blockstream co-founder Adam Back predicted no material quantum risk over the next decade.
The BTC options delta skew surged to 17% on Friday, reaching its highest point in over a year according to data from Laevitas. This indicates extreme fear and often precedes volatile price swings.
Approximately $860 million in leveraged long BTC futures positions were liquidated between Thursday and Friday. However, aggregate futures open interest has actually fallen to $46 billion from $58 billion three months ago.
Declining leverage is not inherently bearish, as it can create a healthier market foundation. Analysts often look to stablecoin demand in China to better gauge real-time risk appetite.
Typically, stablecoins trade at a slight premium to the US dollar/Yuan exchange rate. The current 0.2% discount suggests moderate outflows, though this is an improvement from last week’s 1% discount.
Ultimately, derivatives reflect a cautious mood following a 13% price drop in two weeks. Bitcoin’s ability to reclaim $87,000 may depend on broader macroeconomic factors shifting.
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