Bitcoin Reclaims $71,000 – What’s Behind the Rally and How Long Might It Last?
The world’s largest cryptocurrency has recovered a substantial portion of its recent losses, but futures‑market data and options‑skew metrics reveal lingering caution among professional traders.
Market snapshot
After sliding to a low of $60,150 on Friday, Bitcoin (BTC) has bounced back roughly 17 %, nudging the price just above the psychologically important $70 k level. The rally, however, is modest when compared with the upside momentum seen in gold or leading tech equities this week, and overall market leverage remains thin.
Derivatives activity signals restraint
Futures liquidations – In the past five days, leveraged long positions in Bitcoin futures have been forced to close, wiping out about $1.8 bn of contracts. The rapid unwind suggests that at least one large hedge fund or market‑making entity may have been over‑exposed, prompting a wave of risk‑off trading.
Open interest – Despite the liquidation spike, the aggregate open interest on major futures exchanges stayed roughly steady at 527,850 BTC (flat week‑on‑week). The notional value of these contracts fell from $44.3 bn to $35.8 bn, mirroring Bitcoin’s 21 % price decline over the same seven‑day period. The static open‑interest level indicates that new participants continue to add bets, even as the price drifts lower.
Basis premium – The futures‑spot basis, which normally sits between 5 % and 10 % (annualised) to compensate for the longer settlement horizon, has compressed to 2 %, the lowest figure recorded in more than a year. A narrowing basis is typically a sign that market makers are demanding less compensation for future exposure, reflecting a lack of appetite for bullish leverage.
Options market paints a picture of fear
The put‑call skew on two‑month Bitcoin options spiked to 20 % on Friday – a level historically associated with panic. In normal conditions, a positive skew (more demand for puts) signals bearish sentiment, while a negative skew reflects “fear of missing out” and a rush for calls. A 20 % skew is uncommon and suggests that traders are heavily hedging against further downside.
For context, the skew was 11 % during the November‑2025 correction when Bitcoin fell 28 % from a short‑term peak of $111 k to $80 k. The current reading, occurring without a clear macro catalyst, underscores a market environment dominated by uncertainty and heightened risk aversion.
Why the rally may be fragile
- Liquidity squeeze – With leveraged long positions already liquidated, any fresh wave of buying pressure could be quickly absorbed, limiting the upside.
- Low premium demand – The compressed futures basis indicates that investors are not willing to pay the usual risk premium for forward exposure, a classic sign of subdued confidence.
- Elevated options skew – Persistent demand for protective puts points to a broad expectation of further corrections, especially as Bitcoin remains 44 % below its all‑time high.
- Potential systemic stress – Speculation that a major market maker, exchange, or hedge fund may have experienced a solvency shock continues to loom, reinforcing a defensive stance among professional participants.
Outlook
While the price breach above $70 k confirms that buying interest still exists, the confluence of high liquidation figures, a record‑low futures premium, and extreme put‑call skew suggests that sustained bullish momentum is unlikely in the near term. Absent new catalysts—such as a clear regulatory win, a major institutional inflow, or a breakthrough in on‑chain usage—the market could remain in a “wait‑and‑see” mode, with price action largely dictated by short‑term technical levels rather than fundamental enthusiasm.
Key takeaways
- Bitcoin is up 17 % from its recent low, but the rally is modest compared with other asset classes.
- $1.8 bn of leveraged futures have been liquidated in the past five days, indicating possible distress among large players.
- Open interest remains flat, while the notional value of contracts has fallen, mirroring the price decline.
- The futures‑spot basis has contracted to a 2 % annualized premium – the weakest level in over a year.
- Put‑call skew on two‑month options reached 20 %, a rare reading that reflects heightened market fear.
- With Bitcoin still far from its record high and professional sentiment cautious, the $71 k level may act more as a temporary foothold than a lasting support.
As always, investors should conduct their own due diligence and consider the volatility inherent to cryptocurrency markets.
Source: https://cointelegraph.com/news/bitcoin-rallies-to-71-5k-after-historic-sell-off-but-derivatives-metrics-remain-soft?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
