Bitcoin Set to Surge Towards $90,000 Driven by Derivatives Insights

On March 14, Bitcoin (BTC) struggled to maintain its position above $85,000, despite a 1.9% increase in the S&P 500 index. Notably, it has not surpassed the $90,000 mark in over a week, raising concerns among traders about the possible end of the bull market and the duration of ongoing selling pressure.

Recovery of Bitcoin Basis Rate from Bearish Trends

From a derivatives standpoint, Bitcoin indicators have demonstrated robustness despite a substantial 30% decrease from its peak of $109,354 on January 20. The Bitcoin basis rate, which indicates the premium of monthly contracts relative to spot markets, has rebounded to satisfactory levels after briefly indicating bearish sentiment on March 13.

Typically, traders look for a 5% to 10% annualized premium to offset the longer settlement times. A basis rate falling below this threshold signals weak demand from leveraged buyers. Although the current rate of 5% is lower than the 8% observed two weeks ago, it remains in neutral territory.

Central Banks Expected to Drive BTC Prices Higher

Bitcoin’s price movements have closely mirrored those of the S&P 500, suggesting that the factors influencing investor risk aversion may not be directly related to Bitcoin itself. This raises questions regarding Bitcoin’s status as a non-correlated asset, particularly in the short term.

Should Bitcoin continue to be significantly affected by the stock market—currently under stress from recession worries—investors are likely to reduce their risk exposure and turn toward safer short-term bonds. Nonetheless, central banks are anticipated to roll out stimulus efforts to stave off a recession, which could lead scarce assets such as Bitcoin to outperform in response.

According to the CME FedWatch tool, markets are pricing in less than a 40% chance that U.S. interest rates will drop below 3.75% from the current 4.25% before the July 30 FOMC meeting. However, Bitcoin is projected to recover the $90,000 mark once the S&P 500 mitigates some of its recent 10% losses. In a worst-case scenario, a wave of panic selling of risk-on assets could continue, potentially leading Bitcoin to underperform in the upcoming months, particularly if spot Bitcoin ETFs face sustained net outflows.

Absence of Stress Signs in Bitcoin Derivatives

Current market conditions indicate that professional traders are not heavily utilizing Bitcoin options for hedging, as evidenced by the 25% delta skew metric, showing that few participants foresee Bitcoin retesting the $76,900 level in the near future.

In bullish conditions, put options typically trade at a discount of 6% or more, while bearish states cause the indicator to rise to a 6% premium, which was briefly observed on March 10 and 12. However, the 25% delta skew has remained within neutral limits, reflecting a sound derivatives market.

Assessing BTC margin markets is essential for gauging trader sentiment; these markets allow traders to leverage stablecoins to purchase Bitcoin instead of relying solely on derivatives contracts. The long-to-short margin ratio at OKX currently indicates a strong bias toward longs, with an 18 times advantage over shorts. Historically, extreme confidence has caused this ratio to exceed 40 times; levels under five times signify bearish sentiment.

Given the absence of stress or bearish conditions in Bitcoin derivatives and margin markets, confidence remains robust, especially after over $920 million in leveraged long futures contracts were liquidated in the week ending March 13. As recession fears lessen, Bitcoin price is projected to reclaim the $90,000 threshold in the coming weeks, buoyed by resilient investor sentiment.

This article is intended for general informational purposes and should not be construed as legal or investment advice. The views and opinions expressed here belong solely to the author and do not necessarily reflect the positions of Cointelegraph.