Bitcoin Price Soars, But Derivatives Metrics Reflect Neutral Sentiment Among Professional Traders

Bitcoin (BTC) finally broke through the $46,000 resistance on March 27, and traders quickly concluded that the bearish trend was over for good. Derivatives indicators and Tether premiums in Asia show a lack of bullish sentiment in the market despite prices touching their highest level in 84 days.

While analysts will have a hard time finding reasons to push Bitcoin above $48,500, we still have to factor in the average daily volatility of 3.8%.

For example, over the past 12 months, BTC has seen daily volatility above 5.8% 44 times, ranging from negative 14.4% on May 19 to 14.6% on February 28.

Bitcoin's gains have pushed the value of the entire crypto market up 15.3% in the past week to $2.2 trillion. Oddly enough, Bitcoin and Ethereum are up 15.7% and 15.8%, almost in line with the altcoin average.

Still, they were no match for the subsequent altcoin rally. Here are the biggest gainers and losers among the 80 largest cryptocurrencies by market capitalization.

Zilliqa (ZIL) has announced a partnership with payment infrastructure provider Ramp, and is expected to release its metaverse project called Metapolis, which will be built on the Unreal game engine, alongside Fortnite and PlayerUnknown's Battlegrounds (PUBG). 3D technology is the same.

After GameStop's upcoming NFT marketplace integrated the Loopring network on March 23, the price of Loopring (LRC) surged 51%, while Axie Infinity (AXS) jumped 41%, as the team outlined steps to take control of project funding and governance control plan.

Axie is also expected to launch the Origin game in the next few weeks, which includes reimagined action cards for the eyes and ears body parts.

Tether premium points to weak retail demand

The OKX Tether (USDT) premium is a good measure of demand for the cryptocurrency among retail traders in China. It measures the difference between Chinese USDT peer-to-peer transactions and the official U.S. dollar currency.

Excessive buying demand tends to push the indicator above fair value, which is 100%. On the other hand, during bearish markets, Tether’s market is overquoted, creating discounts of 4% or more.

Currently, Tether’s premium is 99.9%, which is neutral. As such, the data shows that retail demand has not picked up despite the improvement in prices, which is odd considering the total cryptocurrency market capitalization jumped 15.3%.

Funding rates show traders are hesitating

Perpetual contracts, also known as inverse swaps, have embedded rates that are typically charged every eight hours. Perpetual contracts are the derivatives of choice for retail investors because their prices tend to track the regular spot market perfectly.

Exchanges use this fee to avoid exchange risk imbalances. A positive funding rate indicates that longs (buyers) need more leverage. However, the opposite happens when shorts (sellers) need additional leverage, causing the funding rate to go negative.

Note that the cumulative 7-day funding rate is balanced in most cases. This data indicates a need for balanced leverage between bulls (buyers) and sellers (shorts).

For example, Solana's (SOL) positive funding rate of 0.20% per week equates to 0.8% per month, which is not a burden for traders establishing futures positions. Typically, funding rates can easily exceed 5% per month when over-optimism creates an imbalance.

One could argue that Bitcoin's price rally above $47,000 is a bear's coffin, as the cryptocurrency has shown strength amidst global macroeconomic uncertainty.

Currently, there is no sign of bullishness among Asian retail traders, as measured by the Chinese yuan Tether premium, or pressure from leveraged longs (buyers) in the futures market. Therefore, the overall crypto market sentiment is neutral.