**Bitcoin Price Update: Navigating Recent Market Fluctuations**
On September 11, the price of Bitcoin (BTC) faced a 2.2% decline in response to newly released US consumer inflation data. However, it swiftly rebounded to reclaim the $56,500 mark within a few hours. This fluctuation closely mirrored the performance of the S&P 500 index, which fell by 1.6% on the same day, coinciding with the Consumer Price Index (CPI) growth reaching its lowest point in over three years.
Despite enduring the volatility linked to the CPI, Bitcoin traders remain unconvinced about the possibility of surpassing the $58,000 resistance level, especially as demand for bearish positions in BTC futures contracts has surged.
*Bitcoin/USD (blue) vs. S&P 500 futures (magenta). Source: TradingView*
The recent price movements over the past three days demonstrate a strong correlation between Bitcoin and the US stock market, at least in the short term. Such phenomena often occur during pivotal events, such as anticipated macroeconomic data releases or decisions from the US Federal Reserve.
Investors had hoped that inflation rates slightly falling below market expectations on September 11 would prompt the central bank to consider a more aggressive approach to interest rate cuts. The US Core Consumer Price Index (CPI) increased by 2.5% year-over-year in August; however, when food and gas prices were excluded, the rise was 3.2%.
From a trading standpoint, this data has diminished the likelihood of a 0.50% interest rate cut on September 18, resulting in an immediate negative reaction from the stock market. Perspectives may vary regarding how persistent inflation will influence Bitcoin’s price, particularly when factoring in the rising costs of US debt financing.
According to the US Congressional Budget Office (CBO), interest payments are projected to exceed $1 trillion by 2025. As the Federal Reserve keeps rates elevated, government spending may face increasing pressure. In the long haul, this inflationary trend could positively impact Bitcoin’s valuation, even in light of the recent struggle to breach the $58,000 threshold on September 10.
However, attributing Bitcoin’s failure to maintain upward momentum solely to macroeconomic indicators seems inconsistent, particularly since it last closed above $60,000 on August 27. Some analysts have pointed to outflows from spot Bitcoin exchange-traded funds (ETFs), while others highlight ongoing regulatory uncertainty affecting exchanges, services, and intermediaries.
**A Lack of Confidence in Leverage Demand**
When examining the demand for leverage in BTC futures contracts, it emerges as a crucial gauge of investor sentiment. In optimistic market conditions, the funding rate on perpetual contracts turns positive. Rates between 0.2% and 1.2% per month are generally associated with neutral market conditions, while rates below this range indicate a bearish outlook.
*Bitcoin futures 8-hour funding rate. Source: Laevitas*
Data reveals that the Bitcoin funding rate has mostly remained negative since September 7, when BTC briefly dipped to $52,600 after $311 million in leveraged long liquidations occurred over two days. Despite this, the cost of entering bearish positions through leverage has stayed below 0.6% per month, suggesting that bearish investors lack clear conviction as well.
**Market Sentiment Reflected in Options**
To gauge whether this sentiment is limited to perpetual futures, we can analyze Bitcoin’s options markets. A negative skew suggests heightened demand for call (buy) options compared to put (sell) options. In neutral markets, delta skew typically ranges from -6% to +6%.
*Bitcoin 2-month options 25% delta skew at Deribit. Source: Laevitas*
Currently, Bitcoin’s 25% delta skew stands at 4%, indicating that put options are trading at a slight premium. Notably, this metric has remained relatively stable over the past week, reflecting neutral sentiment despite the retest of the $53,000 support level on September 7. Thus, it would be inaccurate to conclude that traders have turned bearish solely based on the negative funding rate in perpetual contracts.
While it is challenging to predict whether the subdued demand for leveraged longs will reinforce the $58,000 resistance in the near term, the potential for a bullish movement toward $60,000 will likely hinge on how the stock market responds to Bitcoin’s recent price developments.
This article is intended solely for informational purposes and should not be construed as legal or investment advice. The opinions expressed herein are those of the author and do not necessarily represent the views of Cointelegraph.