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Bitcoin (BTC) recently fell toward the $60,000 level before managing a rebound, but indicators from the derivatives market are warning that conditions have not yet reached a true capitulation bottom. Experts note that the absence of clear signs of panic selling in the futures market suggests the possibility of further downside cannot be ruled out.
According to a market report released Monday, Greg Magadini, director of derivatives at Amberdata, analyzed that it is difficult to be confident that current conditions represent a genuine capitulation phase. He pointed to the muted reaction in futures basis as evidence that investors have not yet entered a phase of forced selling in which losses are realized amid panic.
The basis, which typically refers to the price difference between futures contracts and the spot market, is widely used as a key indicator of market sentiment. At past bear market bottoms, Bitcoin futures have traded at significant discounts to spot prices in a state known as backwardation, with such sharp discounts viewed as signals of capitulation and the final wave of selling pressure.
However, Magadini’s analysis shows that even as Bitcoin dropped more than 10% last week, the 90-day futures basis only briefly declined and did not display clear signs of capitulation. Currently, Bitcoin futures are maintaining a premium of around 4%, roughly in line with risk-free Treasury yields, suggesting the market still retains a degree of optimism or at least has not succumbed to extreme fear.
This stands in stark contrast to the end of the 2022 bear market. At that time, when Bitcoin was forming a bottom below $20,000, 90-day futures traded at discounts of as much as 9% to spot prices, reflecting intense market fear. Analysts caution that if history repeats itself, an additional downturn could unfold in which futures investors capitulate and prices move into deeply discounted territory relative to the spot market.
Meanwhile, Bitcoin briefly came under pressure near the $60,000 level last week but has since recovered to around $69,000 on the back of rebound buying. Nevertheless, as warning signals from the derivatives market remain active, a cautious approach is warranted rather than hastily declaring a market bottom.
Disclaimer: This article is for investment reference only, and no responsibility is taken for any investment losses based on its contents. The information provided should be interpreted solely for informational purposes.