Our view on bitcoin is cautious heading into Thursday\u2019s, May 29, Personal Consumption Expenditures (PCE) report for April. Spot price has stabilised within a tight $74,000-$80,000 channel following the $766 million\u00a0liquidation on Saturday, May 23 and the underlying market structure looks to have deteriorated rather than achieved a healthy reset.\u00a0<\/p>\n
Since 15 May,\u00a0 futures open interest\u00a0 (OI) has fallen sharply following a price correction that has seen BTC fall over 10 percent from recent highs above $82,000. Bitcoin\u2019s aggregated global OI has now dropped back below $55 billion, the lowest reading since 11 April, and is down 14 percent from when BTC was trading above $80,000.<\/p>\n
Surprisingly however, the leverage environment has rapidly reheated, cutting against the typical post-cascade patterns that require a week of neutral-to-negative funding for a cautious position rebuild. Within 72 hours of the 23 May largest aggregate\u00a0 liquidation in three months (the second largest this year), perpetual funding has aggressively rebounded to a median of +10.95 percent annualised across exchanges for BTC, exceeding the +10 percent APR threshold we identify as overheated.\u00a0<\/p>\n
Institutional venues such as the Chicago Mercantile Exchange (CME) aren\u2019t seeing comparable open interest and funding rate behaviour, a divergence that suggests heightened demand for leveraged longs is concentrated among retail traders on typical cryptocurrency trading venues. It appears retail-skewed flow is re-engaging long positions aggressively, a move unsupported by institutional trading books in options markets and on CME.<\/p>\n
Open interest-weighted funding rates are positive across BTC\/stable trading pairs as well. This is a noisy metric with brief fluctuations throughout, but the overall trend, since BTC was trading below $65,000 in early April, had been a strong spot taker bid driving price higher, creating an environment of sustained negative funding rates.<\/p>\n
With the change in Exchange Traded Fund (ETF) buying and a lack of other structured products and institutional demand, this has flipped. Funding is now consistently positive while price has corrected significantly off the highs and remains confined to the $72,000-$82,000 range.<\/p>\n
The persistent negative Coinbase Premium Gap (Coinbase BTC-USD spot, minus BTC-USDt spot) is a significant warning sign. It is currently at around\u00a0 -$140 or -18 basis points, and has continued to decline over the past 10 days.\u00a0<\/p>\n
In the post-ETF landscape, this reflects a structural reality: direct US spot demand on Coinbase has been largely displaced by indirect institutional demand via ETFs, structured products, and over-the-counter desks.<\/p>\n
Price is in an uptrend on the lower timeframes since the breakout from our previous range highs at $72,000, but the continuation set-up is absent. A strong uptrend is typically driven via the spot tape, which would mean persistent negative funding rates and a persistent positive Coinbase premium. The opposite is the case at present.\u00a0<\/p>\n
Without any external catalysts, the data points towards either a potentially deeper correction or a continuation of the range with volatility reducing further.<\/p>\n
The options market validates the downside skew. The one-month 25-delta risk reversal (26 June expiry) is positioned at -5.7 percent implied volatility (IV). This means puts are more expensive than calls by a margin that was last observed during the sustained February 2026 drawdown.\u00a0<\/p>\n
Traders are paying a premium for downside protection over upside speculation.<\/p>\n
At-the-money (ATM) implied volatility at 34.3 percent trades 230 basis points above the seven-day realised volatility of 32.0 percent. This spread indicates that the front end is not complacent: dealers are actively paying to hedge against downside movements, a defensive stance taken even after spot price has recovered over 4.8 percent off the 23 May lows at $74,027.\u00a0<\/p>\n
A scenario where we see spot consolidation, leveraged perpetual traders and defensive options dealers, is characteristic\u00a0 of either price range continuation, or a signal of further declines.<\/p>\n
Thesis Confirmation:<\/strong> Our cautious view is confirmed if BTC funding sustains above +10 percent annualised into Thursday\u2019s PCE release while the Coinbase Premium Gap remains negative. This scenario repeats the pre-cascade imbalance and reopens $74,000 as a retest level, with $72,000 as the subsequent floor. The 25-delta risk reversal would likely widen further into negative territory.<\/p>\n Thesis Invalidation:<\/strong> The thesis is invalidated if the Coinbase Premium Gap flips positive and funding normalises across all venues. A signature of re-engaging visible US spot demand would put the $80,000 level back in play.<\/p>\n Resolution Catalyst:<\/strong> A hot print for PCE\u00a0 on Thursday, 28 May\u00a0 would increase stress on the leverage-long book by shifting the rate path outlook, whereas an in-line print would remove the macro catalyst, forcing the range to resolve purely on positioning dynamics.<\/p>\n The post Leverage Reheats as BTC Price Structure Weakens<\/a> appeared first on Bitfinex blog<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" Our view on bitcoin is cautious heading into Thursday\u2019s, May 29, Personal Consumption Expenditures (PCE) report for April. Spot price has stabilised within a tight $74,000-$80,000 channel following the $766 million\u00a0liquidation on Saturday, May 23 and the underlying market structure looks to have deteriorated rather than achieved a healthy reset.\u00a0 Since 15 May,\u00a0 futures open […]<\/p>\n","protected":false},"author":0,"featured_media":171228,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-171227","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/171227"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=171227"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/171227\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/171228"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=171227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=171227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=171227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}