Bitcoin traders are feeling cautious right now. The gap between spot prices and derivatives prices on Binance has hit a record high. Interestingly, while prices are near all-time highs, traders in the derivatives market are setting bearish records.
Recent data from CryptoQuant shows that the discount for derivatives on Binance has never been wider. On January 24, derivatives traded at a staggering $62.40 below the spot price. This unusual behavior among investors seems to stem from recent macroeconomic data released by the Federal Reserve. These reports highlight expectations for rate cuts and inflation.
Darkfost, a contributor at CryptoQuant, points out that if inflation data continues to improve, it could boost investor confidence. Key indicators like the Consumer Price Index and Producer Price Index are crucial here. The next report on Personal Consumption Expenditures (PCE) is due on January 31, right after the Fed's meeting to discuss interest rates.
Weakness at the end of Q4 is evident in the mixed performance of BTC prices. The BTC/USD pair has frequently tested the $90,000 support level. The lack of confidence in the derivatives market suggests that traders are hesitant to make short-term bets. This behavior is not typical in Bitcoin bull markets.
Historically, during bullish cycles, gaps between spot and perpetual prices tend to normalize. When these gaps reach extreme negative levels, it often signals a strong buying opportunity. Market sentiment usually overreacts before stabilizing.
The $90,000 price support is crucial. Yonsei Dent, another CryptoQuant contributor, emphasizes that the $100,000 mark isn’t the most critical support level to watch. Short-term holders, or STHs, who keep their coins for up to six months, remain profitable as long as BTC stays above $96,400.
If BTC/USD drops below this level, STHs holding coins for a week to a month will face losses. Those holding for one to three months will start to feel the pinch at $95,900. The average cost basis for STHs is just below $90,000, which Dent describes as a critical support level.
As volatility decreases, the $89.9k level becomes increasingly important. Any significant price movement from here will need close attention, especially since it serves as both a technical and on-chain support zone.