Bitcoin Surges 4% to $109,700 Amid Eurozone Expansion and US Labor Weakness

Bitcoin (BTC) experienced a significant surge, reaching $109,700 on Wednesday, after briefly retesting the $105,200 support level earlier in the day. This rally coincided with data indicating monetary expansion in the eurozone and signs of weakness in the United States labor market. Despite trading just 2% below its all-time high, traders remain cautious and uncommitted, as evidenced by derivatives metrics. This cautious stance has led some investors to question the sustainability of the rally.

The Bitcoin futures premium remained below the 5% neutral threshold on Wednesday, indicating a lack of bullish sentiment. This trend has been ongoing since June 11, when the indicator last approached bullish territory, coinciding with Bitcoin's previous test of the $110,000 level. The subdued demand for leveraged long positions in Bitcoin reflects heightened economic recession risks, particularly amid escalating global trade tensions. US President Donald Trump has threatened to raise import tariffs on Japanese goods above 30% if no agreement is reached before the July 9 deadline.

To determine whether the lack of enthusiasm in Bitcoin derivatives is limited to futures, it’s helpful to examine BTC options markets. If traders were anticipating a sharp downturn, the 25% delta skew would rise above 6%, as put (sell) options gain a premium over call (buy) options. Currently, the skew metric stands at 0%, unchanged from two days prior, suggesting that traders see balanced risks for price moves in either direction. While this reflects lukewarm sentiment at the $109,000 level, it still marks an improvement from the bearish stance observed on June 22.

Despite Bitcoin’s price reaching a three-week high, demand for cryptocurrencies in China has declined sharply, as indicated by the stablecoin premium. The Tether (USDT) discount relative to the official US dollar exchange rate in China typically signals fear, as it reflects investors cashing out of crypto markets. In contrast, strong demand for cryptocurrencies tends to push stablecoins above their peg. The current 1% discount is the steepest since mid-May, indicating a lack of confidence in Bitcoin’s recent gains.

Traders have grown increasingly concerned about the fallout from the ongoing tariff war, especially following Tuesday’s $342 million in net outflows from spot Bitcoin exchange-traded funds (ETFs). As a result, the subdued activity in the derivatives market mirrors broader macroeconomic uncertainty. The eurozone’s record-high broad money supply (M2) in April likely played a significant role in Wednesday’s rally, with a 2.7% year-over-year expansion aligning with the expansionary trajectory of the US monetary base. Meanwhile, ADP data showed US private payrolls fell by 33,000 in June.