Key Summary:
The demand for downside protection in the Bitcoin derivatives market has decreased, indicating a rebound in investor confidence.
The increase in U.S. import tariffs on Japan and South Korea has heightened recession concerns, enhancing Bitcoin's appeal as a hedging tool.
Bitcoin (BTC) has been fluctuating in a narrow range between $107,300 and $110,600 since Wednesday, sparking speculation in the market about a potential sudden price surge. Market participants are increasingly convinced that the injection of new liquidity by major central banks could serve as a catalyst for a Bitcoin bull market.
Market analyst Ted Pillows points out that Bitcoin's performance lags behind the global money supply chart. If the historical correlation between the two remains valid, Bitcoin may be poised for an upswing. Additionally, X platform user Ted Pillows believes that the delay in the U.S. import tariff deadline "signals a green light for Bitcoin to hit $120,000."
U.S. Treasury Secretary Scott Bessent stated that import tariffs will be raised on August 11 for countries that have not yet reached an agreement with the Trump administration. Previously, the government had set Wednesday as the deadline for negotiations, so investors welcomed the delay as a sign of progress in avoiding a trade war.
On Saturday, demand for put (sell) options on the Deribit platform surged, raising the put/call options ratio to its highest point in over a year. Although this unusual performance reflects strong demand for downside protection, the impact has gradually faded. As of Monday, the indicator had fallen back to 0.8, with call (buy) options regaining dominance.
If traders significantly increase leveraged short bets on Bitcoin, the Bitcoin futures premium is typically affected. Under neutral conditions, monthly contracts generally trade at a premium of 5% to 10% over spot prices to compensate for the longer settlement period. A surge in short demand often drives the premium below 5%.
Futures data also indicates that bearish sentiment in the market warmed over the weekend, with the Bitcoin futures premium dropping to 3.5% on Saturday, down from 4.5% on Friday. However, as of Monday, even with BTC prices below $108,000, the futures premium had rebounded above the neutral level of 5%.
Although Bitcoin derivatives indicators have not yet issued a clear bullish signal, the previous surge in demand for downside risk protection has begun to ease. This change reflects a restoration of investor confidence, particularly notable against the backdrop of the S&P 500 index's 0.9% decline on Monday.
Concerns about economic recession have deepened following Trump's announcement of a 25% tariff on imports from Japan and South Korea. In response, the yield on the U.S. 10-year Treasury bond rose to its highest level in two weeks, with investors demanding higher yields for holding government bonds.
The escalating trade tensions have pushed the market overall toward risk aversion. However, Bitcoin remains above $107,000, and the improvement in derivatives indicators further solidifies expectations for a potential rise to $120,000.
Ultimately, whether this prediction can be realized hinges on whether investors can shift their perception of Bitcoin from a risk asset to a hedging tool and an alternative financial system.
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Original: “Bitcoin (BTC) Data Points to Rally to $120K After Pro-BTC Traders Abandon Their Bearish Bets”
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