Bitcoin maintains $30K level, yet some professional traders express doubts regarding the continuation of BTC’s price movement.

The price of Bitcoin (BTC) has finally surpassed the $30,000 mark after this significant price range served as a resistance level for ten months. On April 10, BTC experienced a 6.5% increase, marking the end of a frustrating 12-day stretch characterized by very low volatility, during which the price remained around $28,200. Market participants are now optimistic that the bear market has officially concluded, particularly given that BTC has appreciated by 82% year-to-date.

Another noteworthy observation is the confirmed decoupling of Bitcoin from traditional markets, as evidenced by the S&P 500 index, which recorded only a 0.1% increase on April 10, while West Texas Intermediate (WTI) oil fell by 1.2%. Bitcoin traders are likely anticipating a reversal in the Federal Reserve’s interest rate policy in the near future.

Stagflation risk may contribute to the decoupling

Increased interest rates enhance the appeal of fixed-income investments, while businesses and households encounter higher costs to refinance their debts. A reversal of the recent tightening measures by the U.S. central bank is viewed as favorable for risk assets. However, concerns about stagflation—a scenario marked by rising inflation and negative economic growth—could pose significant challenges for the stock market.

Fixed-income traders are speculating that the Federal Reserve may implement one more interest rate hike, as the latest economic indicators show moderate resilience. For example, the U.S. unemployment rate of 3.5%, announced on April 7, is the lowest recorded in fifty years.

The U.S. treasuries market indicates a 76% probability that the Federal Reserve will increase the benchmark rate by 0.25% on April 29, according to Bloomberg. Additionally, there remains uncertainty regarding the banking crisis’s effects on the sector, with JPMorgan Chase, Wells Fargo, and Citigroup set to release their first-quarter results on Friday.

Bitcoin’s rise above $30,000 could represent the initial signs of a shift in investor perception from viewing it as a risk market proxy to recognizing it as a scarce digital asset that may thrive amid inflationary pressures and sluggish economic growth.

Two essential factors will influence the sustainability of this rally: the high levels of leverage that raise the likelihood of forced liquidations during typical price fluctuations, and whether professional traders are factoring in increased probabilities of a market downturn through options instruments.

Bitcoin futures show slight improvement

Bitcoin quarterly futures are favored by large investors and arbitrage desks. However, these fixed-month contracts generally trade at a slight premium compared to spot markets, suggesting that sellers are demanding more to postpone settlement.

Consequently, futures contracts in robust markets should exhibit a 5% to 10% annualized premium—a condition referred to as contango, which is not exclusive to cryptocurrency markets.

Bitcoin 2-month futures annualized premium. Source: Laevitas.ch

Bitcoin traders have been cautious in recent weeks, and despite the recent breakout above $30,000, there has not been a significant increase in demand for leveraged long positions. Nevertheless, the Bitcoin futures premium has improved slightly from its recent low of 3% on April 8 to its current level of 4.2%. This indicates that buyers are not excessively leveraging their positions and that there is healthy demand in regular spot markets.

Bitcoin option traders maintain neutrality

Traders should also examine options markets to gauge whether the recent correction has led to increased optimism among investors. The 25% delta skew serves as a significant indicator when arbitrage desks and market makers charge a premium for upside or downside protection.

In summary, if traders expect a decline in Bitcoin’s price, the skew metric will rise above 7%, while periods of enthusiasm typically exhibit a negative 7% skew.

Related: MicroStrategy Bitcoin bet turns green as BTC price climbs to 10-month high

Bitcoin 60-day options 25% delta skew: Source: Laevitas.ch

Currently, the options delta 25% skew has transitioned from a balanced demand between call and put options on April 9 to a modest 4% discount for protective puts on April 10. While this reflects a slight uptick in confidence, it does not surpass the 7% threshold indicative of moderate bullish sentiment.

In essence, Bitcoin options and futures markets suggest that professional traders are somewhat more confident, though not excessively so. The initial decoupling from traditional markets is encouraging, as it indicates that investors believe crypto markets will benefit from rising inflationary pressures and suggests that traders think the Fed may no longer be able to continue increasing interest rates.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.