Bitcoin Derivatives Signal Elevated Stress Following Market Rout
Bitcoin dropped over 10% from $84,177 to $75,947 during the weekend, creating a CME futures gap of over 8%—the fourth largest since 2017. This selloff was driven by a risk-off environment amid macroeconomic and geopolitical factors like a U.S. government shutdown, trade tensions, rising Japanese bond yields, and conflicts in Iran and the South China Sea. Thin weekend liquidity led to $2.56 billion in Sunday liquidations and over $5.42 billion since Thursday, reducing open interest to a nine-month low at $24.17 billion. The gap between $77,000 and $84,000 is expected to influence trading, though a rebound may take weeks. Technical indicators signal extreme exhaustion, with Bitcoin falling below major support levels including ETF average cost bases. Despite persistent volatility, analysts see this as a healthy deleveraging rather than a structural bear market. Options data shows defensive positioning, with investors heavily buying puts. Analysts highlight $68,000 to $70,000 as support, but note that institutional buying is currently muted and retail speculation has shifted to other sectors.
