Although Bitcoin experienced a single-day drop of over 10% last week and touched around $60,000 before rebounding to approximately $70,000, signals from the derivatives market indicate that this correction may not be over. Amberdata derivatives chief Greg Magadini pointed out that, based on the behavior of the futures basis, “true capitulation” has not yet occurred.
Capitulation refers to a market-wide panic sell-off, where short positions are completely exhausted, laying the groundwork for a new upward trend. Historically, this is often accompanied by a significant discount of futures prices relative to spot prices. However, Magadini emphasized that during this decline, the spread between futures and spot prices has not shown extreme changes.
He stated that in previous dips, the 90-day futures basis for Bitcoin has retreated but by less than 100 basis points, currently remaining around 4%, close to risk-free government bond yields. This contrasts sharply with the end of the 2022 bear market, when Bitcoin fell below $20,000 and the 90-day futures traded at a 9% discount to spot, exhibiting typical signs of capitulation.
From a derivatives structure perspective, if futures prices are significantly below spot, it usually indicates extreme market pessimism about future price movements, but current data does not support such sentiment. Magadini believes that, if history is any guide, Bitcoin could still face pressure until futures traders truly give up on chasing gains and the spread deepens into a more substantial discount.
Currently, Bitcoin is fluctuating around $69,000. Analysts note that the “calm” performance of the futures basis suggests the market has not yet fully cleared out its emotions, and short-term volatility risks remain. This signal also reminds investors that when assessing trend reversals, it is important to consider not only spot prices but also structural changes in the derivatives market.
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