Bitcoin has been facing challenges in maintaining its upward momentum following its peak of $126,219 on Monday. Although firm ETF inflows signal a robust interest from institutional investors, metrics surrounding Bitcoin derivatives indicate that traders remain apprehensive regarding the sustainability of the $117,000 threshold.

Key Insights:

• Current derivatives data reflect a hesitancy among Bitcoin traders despite robust ETF inflows, leaving potential downside risks.
• The escalation of gold prices and waning Treasury yields underscore increasing trepidation among investors amid economic and geopolitical strains.

Gold prices reached a historic high near $4,050 recently as investors sought refuge from market volatility amidst the slow economic growth of the United States. Notably, billionaire investor Ray Dalio warned of substantial risks stemming from increasing US debt, threatening global monetary systems, as reported by Bloomberg.

President Donald Trump attributed new fees imposed by China on rare earth mineral exports as a catalyst warning of steep potential import fees. The S&P 500 index has dipped by 1.9%, reflecting investors’ fears of deteriorating earnings tied to the ongoing trade disputes, particularly affecting the AI sector.

Despite Bitcoin often being regarded as “digital gold,” its correlation with major stock indices remains pronounced, currently at 73%, indicating a significant interplay between trader sentiment and fears of a market downturn.

A recent drop in the one-year US Treasury yield to 3.61%, the lowest level in over three years, indicates investors’ willingness to accept lower returns despite prevailing inflation pressures. The PCE index has shown a 2.7% increase year-over-year in August, marking its highest in half a year, with expectations of price hikes in 2026 linked to new import tariffs.

Traders’ unease is further indicated by the delta skew in Bitcoin options rising to 8%, reflecting persistent worries about price declines, with past optimism last noted after a rally earlier this year.

In China, the demand for stablecoins hints at investor sentiment; it has been observed that during market exits, stablecoins trade at a substantial discount relative to the dollar value.

Notably, Tether has traded at a discount recently, suggesting traders are pulling back amid unsettled Bitcoin movements. However, it has regained parity as Bitcoin trades below $120,000, revealing a reluctance to fully leave the crypto market.

With an impressive $5 billion in net inflows to Bitcoin ETFs recorded in October, trader confidence appears tepid due to lingering macroeconomic uncertainties, with derivatives data reflecting a reluctance towards bullish positions.