Bitcoin Surges 20% to $97,930 on Institutional Demand, but Caution Persists

Bitcoin (BTC) recently surged to $97,930, its highest price in ten weeks, driven by significant institutional investor demand. This price action occurred alongside substantial net inflows into US spot exchange-traded Bitcoin funds (ETFs), totaling $3.6 billion over the past two weeks. However, despite this bullish momentum, traders remain cautious, as indicated by derivatives indicators that suggest a neutral sentiment.

One of the key factors contributing to this cautious sentiment is the ongoing global tariff dispute, which is beginning to impact macroeconomic data. Traders are concerned that fears of an economic recession could limit Bitcoin's price performance, reducing the likelihood of BTC reaching $110,000 or higher in 2025. This concern is further exacerbated by the strong correlation between Bitcoin and the stock market, which has diminished the appeal of its "digital gold" narrative.

Gold's recent 20% rally, from $2,680 to $3,220, has overshadowed Bitcoin's modest gains. Although Bitcoin surpassed silver's $1.8 trillion market capitalization to become the seventh largest global tradable asset, gold's surge to a massive $21.7 trillion valuation has made it the more attractive investment option for some investors. This shift in investor preference has contributed to the cautious sentiment among Bitcoin traders.

The annualized premium for Bitcoin’s two-month futures has remained between 6% and 7% over the past week, staying within the neutral range of 5% to 10%. Compared to January, when Bitcoin was trading near $95,000 and the futures premium was above 10%, traders’ sentiment has weakened. This data suggests there is less optimism, or at least less conviction, in further price gains toward $100,000 and above.

To determine whether professional traders are comfortable with Bitcoin around $97,500, it is helpful to examine the BTC options market. The BTC options 25% delta skew metric is currently near its lowest level since Feb. 15, indicating that whales and market makers are assigning higher odds to further upside from here. This marks a sharp reversal from three weeks ago, when put (sell) options traded at a premium. Overall, Bitcoin derivatives indicate moderate optimism. Traders generally expect further price gains, but bulls are refraining from using leverage. Some might argue that this creates the ideal conditions for a surprise rally, especially since the retest of $74,500 on April 9 did not significantly affect BTC derivatives.

The most important factor influencing Bitcoin’s performance remains the commercial relationship between the US and China. As long as the trade war continues, Bitcoin is likely to continue tracking the S&P 500 movements. While this environment may prevent Bitcoin from reaching a new all-time high in the near term, BTC derivatives are currently leaning slightly in favor of the bulls.