The views of Bitcoin traders on the role of BTC in each portfolio have evolved, strengthening the support level of $100,000.

Source: Cointelegraph Original text: "The evolution of Bitcoin traders' views on the role of BTC in each portfolio has strengthened the $100,000 support level."

Key points:

Bitcoin has struggled to break through the $105,000 mark since May 10, leading traders to question whether the bullish momentum has faded. Although BTC has successfully reclaimed the $104,000 level, the demand for leveraged long positions has sharply declined, as indicated by the drop in Bitcoin futures premiums.

On May 14, the annualized premium of Bitcoin futures peaked at 7%, but then fell to 5%, approaching the threshold between neutral and bearish, which is comparable to the level when BTC traded at around $84,500 four weeks ago.

The decrease in demand for leveraged bullish positions seems to be related to broader macroeconomic uncertainty, as the price of Bitcoin has been closely following the fluctuations of the stock market.

On May 15, S&P 500 futures reversed early-session weakness, while Bitcoin rebounded from $101,800 to $104,000. Investors seemed more confident that the U.S. Treasury would be forced to inject liquidity after Federal Reserve Chairman Jerome Powell warned that "supply shocks" could keep interest rates higher than expected for a prolonged period.

Signs of economic weakness have also emerged. The U.S. Bureau of Labor Statistics reported that the Producer Price Index fell by 0.5% in April, while economists surveyed by FactSet had expected an increase of 0.2%. According to Reuters, investors' limited risk appetite has also been affected by ongoing global trade tensions, as the U.S.-China tariff agreement is only a temporary solution.

The demand for fixed income has increased, and the yield on the 10-year U.S. Treasury bond fell to 4.45% after reaching 4.55% on May 14, reversing the trend of the previous week. Historically, when government bond yields rise, Bitcoin tends to perform better, as this indicates a decrease in confidence in the Treasury's ability to manage debt.

To assess whether traders are merely avoiding leverage or actively betting on a price decline, analyzing the demand for Bitcoin options is helpful. Typically, periods of bearish sentiment will push the BTC delta skew indicator above the neutral threshold of 6%.

Contrary to expectations, Bitcoin put options are trading at a discount compared to call options, indicating strong confidence in the $100,000 support level. However, the optimism seen on May 14 has faded, and the indicator is now at a neutral -4%.

Since the price of Bitcoin is closely related to the US stock market, the likelihood of breaking through $105,000 largely depends on macroeconomic developments, such as the trend of the US Federal Reserve's balance sheet and recession risks. It is noteworthy that the high correlation between Bitcoin and the S&P 500 rarely lasts more than two months.

On May 14, the net inflow into Bitcoin exchange-traded funds (ETFs) in the United States was $320 million, indicating sustained institutional demand. This suggests that investors are gradually shifting their view of Bitcoin from a risk asset to a non-correlated tool, which may reduce the likelihood of a sharp price correction, even in the absence of strong leveraged bullish positions.

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This article is for general information purposes only and should not be construed as, nor does it constitute, legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.