Analysis: The derivatives market reflects a reversal of bearish sentiment towards Bitcoin, with bullish demand on the rise

Despite Bitcoin's price having retraced by as much as 36% since hitting an all-time high, its implied volatility remains at a relatively manageable level. This change reflects that as Bitcoin gradually moves towards institutionalization, its risk transmission mechanisms are being reshaped. In the early stages, Bitcoin's value was primarily driven by speculative traders who sought to profit from its frequent and significant price fluctuations.

The overall derivatives market indicates that bearish sentiment is reversing. According to Coinglass data, the demand for long positions in the Bitcoin perpetual contracts, a high-leverage trading market commonly used by crypto traders, is currently rising, while the open interest remains at a relatively moderate level. The funding rate for related contracts has turned positive, indicating that bullish bets have regained dominance after dipping into negative territory earlier this week.

Deribit data shows that the open interest for call options with a strike price of $100,000 is the highest, whereas the market primarily focused on downside protection around $80,000 and $85,000 in the previous week. GSR's head of OTC trading, Spencer Hallarn, stated, "In the past few weeks, speculative long positions have significantly decreased, as evidenced by the decline in open interest and funding rates for perpetual contracts. This has also prepared the crypto market for the next round of upward movement."