Funding rates on Bitcoin perpetuals — the payments exchanged between long and short holders — remain below zero, a bearish pattern that signals traders are still positioning for downside or demanding compensation to hold long exposure.
At the same time, open interest in Bitcoin perpetual futures has failed to recover from a decline that began in October, underscoring a lack of conviction behind the latest recovery. It’s down 51% from its October peak, Coinglass data shows.
There were no signs of a pickup in open interest on Monday, despite Bitcoin’s bounce from near US$60,000 back toward UDS$70,000.
“Liquidity and market depth have reduced significantly since the Oct 10 crash and that has prompted people to take less leveraged bets and act more conservatively,” Andy Martinez, chief executive of Crypto Insights Group said. “Think the market is still trying to grasp what’s happened since 10/10.”
The muted derivatives response follows a bout of extreme volatility late last week. Bitcoin plunged to as low as US$60,033 on Thursday, its weakest level since October 2024, before staging a swift recovery above US$70,000 on Friday. The token slipped back below US$70,000 again on Monday, highlighting the fragility of sentiment.
Options markets are telling a similar story. Bitcoin’s implied volatility has dropped sharply, from about 83% on Thursday to roughly 60% now, suggesting reduced expectations for large near-term price swings. But measures of positioning remain skewed defensively. The 25-delta call-put skew, a gauge of whether fear or greed dominates options pricing — is still heavily biased toward puts, indicating demand for downside protection, Griffin Ardern, head of research and options trading at BloFin said.
“The impact of leverage on market prices has significantly decreased, helping to reduce volatility and stabilize prices,” Ardern said, adding that “it also means many investors are taking profits or stopping losses at relatively low levels and moving to observation positions, or even leaving the market for a while.”
A market dominated by bearish sentiment typically points to consolidation rather than a swift rebound, he added.
Caution is also being reinforced by a crowded macro calendar. “Despite the market seemingly having found its support late last week, participants remain extremely cautious due to the plethora of potential market-jolting events currently in play,” said Le Shi, Hong Kong managing director at market maker Auros.
He cited risks ranging from Japanese political developments and volatility in precious metals to concerns over the AI-driven stock rally.
Bitcoin was trading at US$68,827 as on 6am in New York.