Bitcoin futures and options markets are cautious, with annualized premiums dropping to 2%, warning of upward resistance

Bitcoin retested the $70,000 level on Wednesday, but data from the futures and options markets indicate that derivatives traders remain cautious about this rebound. The two-month annualized futures premium is only 2%, well below the neutral threshold of 5%; the put options still carry a 14% premium over call options, far exceeding the normal range of -6% to +6%.

Interpreting Key Indicators of Caution in the Derivatives Market

(Source: Laevitas)

The cautious sentiment in Bitcoin futures and options markets is reflected through two core indicators:

Dual Caution Signals from Futures and Options

Futures Annualized Premium: Currently at 2%, significantly below the neutral 5% threshold. Since Bitcoin broke below the $85,000 support level on January 31, 2025, after maintaining it for over nine months, demand for leveraged long positions has essentially disappeared, and bullish momentum has been absent.

Options Delta Skew (Put—Call): Reported at 14% on Thursday, indicating that market demand for downside protection is substantially higher than for upside speculation. Although down from the peak of 28% on Tuesday, it remains well above the neutral zone, suggesting that panic sentiment has not yet dissipated.

ETF Capital Flows: Two days of net inflows totaling $764 million have stabilized spot market sentiment but have not restored the pessimistic outlook in the derivatives market, highlighting a significant divergence in sentiment between spot and derivatives markets.

Multiple Explanations for Recent Bitcoin Decline

Since reaching a high in October 2025, Bitcoin has fallen approximately 32%, and interpretations of the specific reasons vary.

The market crash on October 10 led to the liquidation of $19 billion in leveraged positions within the crypto space, closely coinciding with Trump’s announcement of a 100% import tariff on Chinese goods, widely cited as the initial catalyst. Binance co-founder CZ later denied that the exchange intentionally triggered the crash, and Binance compensated affected users with $283 million due to internal oracle pricing errors.

Concerns over quantum computing remain a persistent narrative. In January, Jefferies strategist Christopher Wood removed Bitcoin from his portfolio, citing potential long-term security threats from quantum attacks, which heightened market fears of quantum vulnerabilities. Developers subsequently proposed BIP-360 to promote research into post-quantum cryptography on the blockchain.

Quantitative trading firm Jane Street has also attracted recent attention. Court-appointed liquidators for Terraform Labs sued Jane Street, alleging that the firm profited from non-public information during the May 2022 Terra Luna collapse. Their latest 13-F filings show holdings in BlackRock’s iShares Bitcoin Trust ETF and several Bitcoin mining companies, but CryptoQuant’s head of research Julio Moreno notes such holdings are typical for delta-neutral strategies. On Thursday, Nvidia’s stock fell 5% after strong earnings, further confirming the prevailing risk-averse sentiment in the market.

Frequently Asked Questions

What does a 2% annualized futures premium mean?
The futures annualized premium reflects market participants’ leverage appetite for future positions. Above 5% is considered neutral to bullish; below 5% indicates weak bullish demand, and approaching zero or turning negative signals a bearish market sentiment. The current 2% suggests that even as Bitcoin approaches $70,000, leverage longs remain very cautious, raising doubts about the sustainability of the rebound.

What does a 14% put options premium indicate?
A high put premium over calls suggests that professional traders are willing to pay more for downside protection, indicating a defensive rather than aggressive market outlook. Under normal conditions, this index stays within -6% to +6%; the current 14% shows that despite Bitcoin’s recovery near $70,000, the derivatives market remains relatively fearful.

How should we interpret the simultaneous ETF inflows and cautious signals in the derivatives market?
ETF inflows mainly reflect institutional spot buying interest, indicating demand at certain price levels. The cautious derivatives signals reflect leveraged positions betting on the market’s direction. Their coexistence suggests a divergence: some institutions are accumulating on dips in the spot market, but derivatives traders lack confidence in further upside, often indicating a phase where rebound momentum is unstable.