Bitcoin Struggles Above $85,000 Amid Market Doubts

Bitcoin has been struggling to maintain levels above $85,000, with traders expressing doubts about the strength of the ongoing bull market. The leading cryptocurrency has not traded above $90,000 for over a week, which has raised concerns about the market's momentum and the duration of the selling pressure.

Despite a 30% drop from its all-time high of $109,354 on January 20, Bitcoin’s derivatives market indicates resilience. The Bitcoin basis rate, which measures the premium of monthly contracts over spot markets, has rebounded after briefly signaling bearish sentiment. Traders typically demand a 5% to 10% annualized premium to compensate for longer settlement periods, and while Bitcoin’s current 5% basis rate is below the 8% recorded two weeks ago, it remains within neutral territory. This suggests that leveraged buyers are still engaged in the market, though with reduced confidence.

Bitcoin’s price movement has closely tracked the S&P 500, challenging the long-held notion that the asset is non-correlated with traditional markets. As global economic uncertainties persist, investors appear to be reducing exposure to risk-on assets like Bitcoin and moving into safer investments, such as short-term bonds. However, central banks are expected to implement stimulus measures to prevent a recession, a move that could favor Bitcoin as a scarce asset.

If economic concerns ease and the stock market stabilizes, Bitcoin could reclaim the $90,000 level. However, if panic selling continues, risk assets may face further pressure, and Bitcoin could struggle in the coming months—especially if spot Bitcoin exchange-traded funds (ETFs) experience continued net outflows.

Despite recent market fluctuations, Bitcoin derivatives remain stable. The 25% delta skew, a key metric for options traders, indicates that professional traders are not actively hedging against further downside. This suggests that the market does not anticipate Bitcoin falling to $76,900 in the near future. During bullish periods, put (sell) options typically trade at a 6% or higher discount, while bearish conditions push this metric to a 6% premium. While brief spikes in bearish sentiment were observed, the delta skew has remained within a neutral range, signaling a healthy derivatives market.

Bitcoin’s margin market further reflects investor confidence. At OKX, the long-to-short margin ratio currently stands at 18:1, indicating strong bullish positioning. Historically, extreme confidence pushes this ratio above 40:1, while levels below 5:1 are seen as bearish. The current ratio mirrors sentiment from January 30, when Bitcoin was trading above $100,000. Over $920 million in leveraged long futures contracts were liquidated in the seven days leading up to March 13, adding to short-term volatility. However, Bitcoin’s derivatives and margin markets show no significant signs of stress, suggesting that investor sentiment remains strong.