Bitcoin surged 11% between April 20 and 26, currently holding around $94,000, which is a two-month high. Before this sharp rebound, the Trump administration signaled a delay in imposing reciprocal tariffs, and corporate earnings reports were strong. Analysts suggest that due to significant short liquidations, the weakening correlation between Bitcoin and stocks, combined with continued bullish sentiment from institutional investors, has helped Bitcoin accelerate towards new highs.
Investor confidence in Bitcoin is reflected in the record net inflow of $3.1 billion into Bitcoin spot ETFs last week. However, an important Bitcoin derivatives indicator shows bearish momentum signals, raising doubts about whether Bitcoin can return to the $100,000 milestone.
Perpetual Bitcoin futures contracts are favored by retail investors due to their close linkage with the spot market. The current funding rate is positive, indicating that buyers must pay to maintain their positions. If the funding rate turns negative, it is associated with bearish trends.
On April 26, there was a significant negative funding rate, which is highly unusual during a bullish market, as it indicates stronger selling demand. This indicator has been fluctuating since April 14, but as the price of Bitcoin climbed above $94,000, sellers were caught off guard, with over $450 million in Bitcoin short positions being liquidated since April 21.
Some factors contributing to renewed confidence and Bitcoin strength can be attributed to the S&P 500 index's increase of 7.1% last week. However, the uncertain prospects of Trump negotiating with China and the strong corporate earnings now are performances before the trade war escalated, indicating that the factors driving the stock market and Bitcoin's rise are different. In fact, Bitcoin's price and the S&P 500 index are no longer closely correlated.
Currently, the 30-day correlation between the S&P 500 index and Bitcoin is 29%, far below the 60% seen from mid-March to mid-April. While a lower correlation does not imply a complete decoupling, it shows that Bitcoin is not just a substitute for technology stocks.
After gold reached a historic high of $3,500 on April 22, it was unable to maintain a bullish trend, but this is seen as a significant development for Bitcoin as an independent asset class. Some traders have questioned Bitcoin's 'digital gold' narrative, but as long as Bitcoin remains above $90,000 for an extended period, investor confidence in Bitcoin paving the way for further increases will grow.
The increase in short leverage in perpetual Bitcoin futures is inconsistent with the mood among professional traders. Monthly Bitcoin futures contracts avoid fluctuating funding rates, allowing traders to know their leverage costs in advance.
On April 26, the two-month Bitcoin futures premium (basis) rose to the highest level in seven weeks, indicating increased interest in long positions. This indicator is currently at 6.5%, still within the neutral range of 5% to 10%, and moving away from bearish territory.
There is a discrepancy in the leverage demand for perpetual futures and monthly Bitcoin contracts, which is not uncommon. Even with retail investors remaining cautious, significant accumulation by institutions could be enough to push Bitcoin above $100,000 in the near term.
