Bitcoin falls under $67K as stocks sell-off, but BTC derivatives are stable

Bitcoin (BTC) price dipped to $67,000 on Oct. 21, erasing the gains from the previous three days. According to some analysts, one reason for the correction was investors reducing their Bitcoin exposure due to fears of contagion from traditional markets. However, BTC derivatives metrics remained notably stable.

Even with concerns that numerous economies might be losing momentum or that confidence in the government’s ability to refinance debt is weakening, demand for Bitcoin derivatives as a hedge remained steady. If whales or arbitrage desks anticipated further decline, these metrics would have reflected more volatility.

Bitcoin futures show no signs of bearish bets

The Bitcoin futures premium, which typically ranges between 5% and 10% in neutral markets, saw only a slight impact on Oct. 21. The higher pricing of monthly BTC futures reflects the extended settlement period and signals bullish sentiment when the premium exceeds 10%.

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

The annualized premium (basis rate) remained above 9% on Oct. 21, even as Bitcoin retested the $67,000 support level. However, before drawing conclusions, it’s important to confirm whether this sentiment was isolated to Bitcoin futures markets. Based solely on price charts, it appears that Bitcoin’s price movement mirrored the intraday performance of the stock market.

S&P 500 futures (green) vs. Bitcoin/USD (blue). Source: TradingView

Arif Husain, head of fixed-income at T. Rowe Price, told Bloomberg that the US 10-year Treasury yield “will test the 5% threshold in the next six months,” driven by rising inflation expectations and concerns over government fiscal spending. Yields increase when investors sell their bonds, indicating that traders are seeking higher returns.

Husain noted that the government will “flood” the market with new debt issuance, while the Federal Reserve is attempting to shrink its balance sheet to curb inflation and prevent the economy from overheating. The US debt interest costs have surpassed $1 trillion on an annualized basis, prompting the central bank to consider lowering interest…

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