Key takeaways:
Bitcoin’s derivatives signal caution, with the options skew hitting 20% as traders fear another wave of fund liquidations.
Bitcoin price recovered some of its Thursday losses, but it still struggles to match the gains of gold or tech stocks amid low leverage demand.
Bitcoin (BTC) has gained 17% since the $60,150 low on Friday, but derivatives metrics suggest caution as demand for upside price exposure near $70,000 remains constrained. Traders fear that the liquidations of $1.8 billion of leveraged bullish futures contracts in five days indicate that major hedge funds or market makers may have blown up.
Unlike the Oct. 10, 2025, market collapse that culminated with a record $4.65 billion liquidation of Bitcoin futures, the recent price weakness has been marked by three consecutive weeks of downside pressure. Bulls have been adding positions from $70,000 to $90,000, as aggregate futures open interest increased despite forceful contract liquidations due to insufficient margins.
The aggregated Bitcoin futures open interest on major exchanges totaled 527,850 BTC on Friday, virtually flat from the prior week. Although the notional value of those contracts dropped to $35.8 billion from $44.3 billion, the 20% change perfectly reflects the 21% Bitcoin price decline in the seven-day period. Data indicates that bulls have been adding positions despite the steady price decline.
To better understand if whales and market makers have turned bullish, one should assess the BTC futures basis rate, which measures the price difference relative to regular spot contracts. Under neutral circumstances, the premium should range from 5% to 10% annualized to compensate for the longer settlement period.
The BTC futures basis rate dropped to 2% on Friday, the lowest level in more than a year. The lack of demand for bullish leverage is somewhat expected, but bulls will take longer than users to regain confidence even as Bitcoin price breaks above $70,000, especially considering that BTC is still 44% below its all-time high.
Bitcoin derivatives metrics signal extreme fear
Traders’ lack of conviction in Bitcoin is also evident in the BTC options markets. Excessive demand for put (sell) options is a strong indicator of bearishness, pushing the skew metric above 6%. Conversely, when fear of missing out kicks in, traders will pay a premium for call (buy) options, causing the skew metric to flip negative.
The BTC options skew metric reached 20% on Friday, a level that rarely persists and typically represents market panic. For comparison, the skew indicator stood at 11% on Nov. 21, 2025, following a 28% price correction to $80,620 from the $111,177 peak reached 20 days earlier. Since there is no specific catalyst for the current downturn, fear and uncertainty have naturally intensified.
Related: What’s really weighing on Bitcoin? Samson Mow breaks it down
Traders are likely to continue speculating that a major market maker, exchange or hedge fund may have gone bankrupt, and this sentiment erodes conviction and implies a high probability of further price downside. Consequently, the odds of sustained bullish momentum remain low while BTC derivatives metrics continue to signal extreme fear.
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