As October approaches, Bitcoin (BTC) is experiencing a positive surge, aligning with historical trends that designate this month as its strongest period of the year. Alongside Bitcoin’s upswing, Ether (ETH) has also registered gains over the past 24 hours, contributing to a 3.0% increase in the CoinDesk 20 Index, which includes a variety of other cryptocurrencies.
Despite these encouraging figures, market participants are advised to proceed with caution due to several alarming indicators. In the derivatives sector, Bitcoin futures are exhibiting a noticeable retreat from previously bullish positions, and the options market presents a mixed picture, complicating the outlook.
Recent data reveals concerning trends in exchange-traded funds (ETFs). Both spot Bitcoin and Ether ETFs in the U.S. recorded net outflows on Friday, with Ether ETFs experiencing their fifth consecutive day of withdrawals—the longest stretch since early September. Such leakage raises questions about investor sentiment in these key financial products.
Further complicating matters is the CME futures gap, which illustrates the discrepancy between Bitcoin prices at the closing of the CME futures market on Friday and its reopening on Sunday. Current observations show this gap is below existing price levels, with a tendency for futures gaps to be filled in the near future.
From a derivatives positioning perspective, Bitcoin’s overall futures open interest has declined from a peak of $32 billion to approximately $29 billion, signaling that traders are reducing their market exposure. The three-month annualized basis has been constrained around 6%, diminishing the profitability of basis trades. Notably, there has been a shift toward short positions, as more traders appear to be unwinding their long holdings.
However, not all signals are bearish. The BTC Implied Volatility Term Structure remains upward-sloping, while the 25 delta skew for short-term options has increased. This suggests that some traders are willing to pay a premium for call options compared to puts—an indication of a bullish outlook among a subset of participants.
Nevertheless, this bullish sentiment is at odds with 24-hour put-call volume, where puts vastly outnumber calls at 58.43%. Such preference reveals that many traders are still looking for downside protection, underscoring a market split in sentiment. The situation paints a picture of uncertainty, featuring dual narratives of potential rallies juxtaposed against pervasive bearish strategies.
The current funding rates reflect these complexities, as rates on platforms like Hyperliquid have turned negative, indicating a stronger bearish outlook. After a period of stability, the annualized funding rate on Hyperliquid plunged to -6%, displaying a clear conviction among short sellers. In contrast, leading exchanges such as Binance and OKX are maintaining neutral funding rates, further emphasizing the divided sentiment.
Data from Coinglass highlights substantial liquidations across the crypto market in the past 24 hours, amounting to $350 million, primarily impacting long positions. Bitcoin, Ethereum, and Solana saw the most significant liquidations, prompting observers to monitor critical levels such as $113,000 on Binance’s liquidation heatmap, which may serve as a barometer for price movements.
On a different note, the XPL token from Plasma has begun to cool off after a heated trading debut, currently priced at $1.29, which is a 12% decline within a day. However, on-chain metrics reveal a different narrative, as deposits surged 13.7% to reach $5.5 billion over the same timeframe. Investors are increasingly drawn to yield-generating products, particularly the Plasma Saving Vaults that currently offer annualized returns around 20%.
As the crypto landscape undergoes fluctuating dynamics, it remains to be seen how platforms like Plasma will weather changing market conditions, especially if a bullish sentiment returns.
