Key takeaways:
-
Bitcoin traders are turning cautious as high oil prices and Middle East tensions fuel inflation and stall US interest rate cuts.
-
The $254 million in spot Bitcoin ETF outflows is too small to confirm a bearish flip, yet options markets show heavy hedging.
- Advertisement -
After a failed attempt to reclaim the $75,000 resistance level earlier in the week, Bitcoin’s price entered a period of consolidation near $70,000 during Friday’s trading session. This stagnation coincided with the first two days of net outflows from U.S.-listed Bitcoin spot exchange-traded funds (ETFs), ending a seven-day streak of inflows. The shift has prompted market participants to question whether institutional sentiment is cooling, particularly as broader financial markets showed emerging signs of weakness.
US-listed spot Bitcoin ETFs daily net flows, USD million. Source: Farside Investors
The bearish undertone is not isolated to cryptocurrencies. The S&P 500 dropped to a six-month low, and even traditional safe-haven gold experienced a sharp 10% sell-off over three days. This global risk-off move has been partly driven by escalating geopolitical tensions in the Middle East and their potential impact on energy supplies. Reflecting this heightened anxiety, Bitcoin’s derivatives markets have shown a clear increase in hedging activity.
Bitcoin options put-to-call premium volumes at Deribit, USD. Source: Laevitas.ch
Options Markets Signal Rising Caution Among Traders
A key indicator of this caution is the dramatic surge in demand for put (sell) options on Deribit, the leading crypto options exchange. On Friday, the volume of put option premiums was nearly 2.5 times greater than that of call (buy) options. This ratio, which spiked to similar levels in late February following Iran’s rejection of nuclear negotiations, signals a strong preference for strategies that profit from or protect against price declines.
To gauge whether this put buying is primarily for speculative bearish bets or for defensive hedging, analysts look at the 30-day delta skew. This metric measures the premium difference between equivalent put and call options. When market makers perceive an elevated risk of a sharp downside move, they charge a higher premium for puts, pushing the skew into positive territory (typically above 6%). Conversely, a negative skew indicates bullish complacency.
Bitcoin 30-day options delta skew (put-call) at Deribit. Source: Laevitas.ch
On Friday, the Bitcoin options delta skew stood at +16%. While not at the extreme panic levels seen in February, this reading confirms that professional traders are pricing in significant risk and are not confident that the $69,000–$70,000 support zone will hold. This sentiment is particularly noteworthy because it persisted even after Bitcoin’s brief rally to $75,000 earlier in the week—a move that failed to generate corresponding optimism in the options market.
Underperformance and Macro Headwinds
This defensive posture is partly fueled by Bitcoin’s relative underperformance. Over the past three months, Bitcoin has lagged the S&P 500 by approximately 17%, a divergence that has frustrated investors accustomed to its historical correlation with risk assets. More critically, this period of weakness coincides with a sustained surge in energy prices. The West Texas Intermediate (WTI) crude oil benchmark has held above $94 per barrel since March 12, representing a roughly 50% increase from a month prior.
The disruption of oil and gas logistics in the Middle East has broader economic implications. Higher fuel costs threaten to squeeze consumer spending and increase production expenses for manufacturers, potentially leading to product shortages and persistent inflationary pressures. This environment directly challenges the U.S. Federal Reserve’s ability to cut interest rates aggressively, removing a key tailwind that had supported asset prices, including Bitcoin, in late 2023 and early 2024.
According to analysis from Oxford Economics cited by Yahoo Finance, the fuel price surge is expected to cause consumers to pull back on spending. This “demand destruction” scenario, coupled with supply chain stresses, creates a stagflationary risk that is antithetical to the dovish monetary pivot many crypto traders had been anticipating.
In this context, the two-day, $254 million net outflow from spot Bitcoin ETFs is likely a symptom rather than a cause of the souring mood. The outflow magnitude is modest compared to the multi-billion-dollar inflows seen in January and February and alone does not signal a wholesale institutional exodus. However, it aligns perfectly with a market-wide increase in risk aversion. The derivatives data—the elevated put/call ratios and positive delta skew—paint a clearer picture: traders are actively buying insurance against further downside, driven by deteriorating macroeconomic conditions and prolonged geopolitical uncertainty.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
