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▲ Bitcoin (BTC) ©Godasol
Bitcoin (BTC) funding rates have finally turned positive, fueling optimism for a push towards the $85,000 mark. However, experts are cautiously optimistic, citing geopolitical risks and derivatives indicators.
According to investment media FXStreet on May 12 (local time), Bitcoin (BTC) has shown strong support around the $80,000 level for over a week, even touching $82,000 on Monday. The annualized funding rate for Bitcoin perpetual futures has surged to around 6% for the first time in a month, entering a bullish territory above neutral. While this indicates increased leveraged demand expecting further upside, bearish betting demand still coexists across the market, leading to a cautious atmosphere among professional traders.
The recent contraction in market sentiment appears to stem from outflows in virtual asset spot ETFs, including the US Ethereum spot ETF, which occurred last Thursday and Friday. ETF flows, a key indicator of institutional investor interest, turned to net outflows, coinciding with the failure to break above $82,000 and intensifying market concerns. Notably, the 10% Delta Skew in the options market, which indicates a premium on put (sell) options, suggests that whales and market makers are still preparing for downside risks.
On the other hand, the fundamentals of the Bitcoin network are showing remarkable resilience. The hash rate, which hit an eight-week low at the end of April, surged by 5% in two weeks, reaching 970 exahashes per second (EH/s). This proves that fears of Bitcoin mining companies leaving the network to expand into the artificial intelligence (AI) high-performance computing sector were unfounded. In fact, the AI transition in the mining industry is acting as a new growth engine, with companies like IREN signing a $34 billion contract with Nvidia.
External geopolitical crises are major obstacles to Bitcoin's price discovery. With former US President Donald Trump completely rejecting Iran's demands and Israel maintaining a firm stance, Brent crude oil prices have surpassed $105 due to the blockade of the Strait of Hormuz. Surging energy prices fuel inflation concerns, suppressing investment sentiment for risk assets. Paradoxically, however, companies like Strategy are using proceeds from stock sales to accumulate an additional $43 million worth of Bitcoin, providing downside rigidity.
In conclusion, Bitcoin faces the challenge of overcoming the skepticism in the derivatives market and macroeconomic uncertainties. Experts analyze that the path towards $85,000 is still open, and whether new funds flow into virtual asset spot ETFs this week will be the crucial catalyst for a price surge. Although it remains 35% below its previous all-time high, continuous accumulation by companies and a robust network status are expected to form the foundation for a mid-to-long-term upward rally.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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