Key takeaways:Bitcoin derivatives show reduced demand for downside protection, suggesting renewed investor confidence.US import tariff hikes on Japan and South Korea intensified recession fears, boosting Bitcoins appeal as a hedge.Bitcoin (BTC) has been trading within a tight $107,300 to $110,600 range since Wednesday, fueling speculation over the potential for a sudden price rally.
Market participants are increasingly confident that fresh liquidity injections by major central banks could serve as a catalyst for a Bitcoin bull run.Source: x/TedPillowsMarket analyst TedPillows pointed out that Bitcoin has lagged behind the global monetary supply chart.
If the historical correlation between the two remains intact, Bitcoin may be positioned for gains.
Additionally, X user TedPillows argued that delays in US import tariff deadlines means a green signal for Bitcoin to reach $120,000.US Treasury Secretary Scott Bessent said import tariffs will increase on Aug.
11 for countries that havent reached an agreement with President Donald Trumps administration.
Initially, the administration had set Wednesday as the deadline for negotiations, so investors welcomed the extension as a sign of progress in avoiding a trade war.Deribit BTC options put-to-call volume (contracts).
Source: Laevitas.chOn Saturday, demand for put (sell) options on Deribit surged, pushing the put-to-call ratio to its highest level in over a year.
While this unusual activity may reflect heightened demand for downside protection, the effect appears to have faded.
By Monday, the indicator had reverted to 0.8, favoring call (buy) options.If traders were significantly increasing their leveraged bearish bets on Bitcoin, the BTC futures premium would likely have been affected.
In neutral conditions, monthly contracts usually trade at a 5% to 10% premium to spot prices, compensating for the longer settlement period.
A spike in short (sell) demand tends to drive that premium below 5%.Bitcoin 1-month annualized futures premium.
Source: laevitas.chFutures data supports the notion of increased bearish sentiment over the weekend, as the BTC futures premium dipped to 3.5% on Saturday, down from 4.5% on Friday.
However, by Monday, the premium rose above the 5% neutral mark, even though BTC traded below $108,000.Bitcoin derivatives metrics may not yet signal bullish momentum, but the sharp spike in demand for downside protection seems to have passed.
This shift suggests renewed investor confidence, particularly notable given the S&P 500 index dropped 0.9% on Monday.Related: Bitcoin price falls to $107K despite $1B spot BTC ETF inflow Whats behind the move?Concerns over economic recession deepened after Trump announced a 25% tariff hike on imports from Japan and South Korea.
In response, the yield on the US 10-year Treasury note climbed to its highest level in two weeks, as investors demanded greater returns for holding government debt.US 10-year Treasury yields (left) vs.
BTC/USD (right).
Source: TradingViewThe trade-related tensions prompted a broader shift toward risk aversion.
Still, Bitcoins ability to remain above $107,000, coupled with improved derivatives indicators, reinforces the case for a rally to $120,000.Ultimately, whether that prediction comes true will depend on a broader change in investor perception, from viewing Bitcoin as a risk-on asset to embracing it as a hedge and an alternative financial system.This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice.
The views, thoughts, and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.