11 Times Spot Trading Volume! Bitcoin's Sandcastle Rally Launched by Derivatives!

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A strong warning has emerged that the rally of the leading cryptocurrency, Bitcoin (BTC), which recently surpassed $76,000, may be a sandcastle propped up by unstable short covering in the derivatives market rather than solid buying momentum, leading to increased market caution.

According to the investment media outlet FXStreet on April 28 (local time), virtual asset market-making firm Wintermute diagnosed that Bitcoin's recent surge is being driven by forced position liquidations in the derivatives market rather than widespread market conviction. Wintermute cited perpetual futures trading volume being a staggering 11 times that of spot trading volume and persistently negative funding rates as evidence. The fact that 95% of the recent $762 million large-scale liquidation event was concentrated in short positions clearly demonstrates that this rally relies entirely on a short squeeze (buying pressure generated to liquidate or cover short positions) rather than spot demand.

Wintermute acknowledged that the gradual improvement in institutional investor participation behind the scenes and Bitcoin surpassing $76,000 are positive, but drew the line, stating that this does not yet signify a complete reversal of the macroeconomic trend. They specifically warned that this week's scheduled US Federal Open Market Committee (FOMC) meeting and the earnings announcements from the Magnificent Seven tech giants will be the real test for the sustainability of the rally.

These macroeconomic events could either justify the current rally or starkly expose the contradictions between an all-time high stock market, soaring energy costs, and plummeting consumer confidence. Wintermute pointed out that the most crucial observation point will be whether Bitcoin falls in tandem with the stock market as a mere risk asset when it falters, or if it demonstrates resilience as a store of value. If Bitcoin maintains its price despite a drop in the Nasdaq index, it would be the strongest store-of-value signal in this cycle; however, if it plummets together, it would mean it is still dominated by macroeconomic risk sentiment.

Meanwhile, in the altcoin market, signs of a clear differentiation phase are being observed as the correlation between tokens ranked from top 10 to 250 breaks down. Overall altcoin returns are stagnant, but funds are flowing into specific thematic coins, such as privacy-focused tokens. DeFi tokens, on the other hand, are showing mixed movements with selective investor approaches in the aftermath of the recent KelpDAO hacking incident.

As of the time of writing, Bitcoin has fallen approximately 1% over the past 24 hours and is hovering around $76,370, pausing before major macroeconomic events.

*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.*