Key Takeaways:
Bitcoin traded at $61,500 as of 11:30 UTC Thursday, recovering from a 20-month low of $59,103, after derivatives pricing signaled the most extreme put premium since early February.
"The one-week options skew shows a near 25-point premium for puts relative to calls, a level that in early February preceded a four-month consolidation above $60,000," Omkar Godbole, markets analyst at CoinDesk, said.
The elevated put premium reflects expectations that the US core Personal Consumption Expenditures price index, due at 12:30 UTC, will show a 3.4% year-on-year gain for May, up from 3.3% in April and the highest since late 2023, according to FactSet. Headline PCE is forecast at 4.1%, up from 3.8%. Open interest across bitcoin futures stood at $28 billion, while funding rates turned negative across major exchanges, Coinglass data shows.
A softer-than-expected core PCE reading could trigger a snap bullish readjustment, undermining the case for a Fed rate hike that markets currently price at 67% for September, according to the CME FedWatch Tool. Conversely, a hot print risks pushing BTC below the $59,000 support level toward the next major floor near $55,000.
Positioning extremes and record supply in loss
The positioning extremes come as bitcoin supply in loss reached a record 10.83 million BTC, Glassnode data shows, meaning roughly 55% of the circulating supply is held at a loss. The last time the one-week put-call skew approached similar levels, in early February, bitcoin carved out an interim bottom just above $60,000 that held for four months.
WTI crude's slide eases inflation fears
The headline PCE reading, while elevated, may already be stale. West Texas Intermediate crude has fallen to about $70 a barrel, well below the $100-plus level during the Iran war in March and April that drove the initial inflation spike. "The main question is less whether both headline and core go up — they are widely expected to — but rather how stale these numbers already are," Mohamed El-Erian, former CEO of Pimco, said on X.
The macro picture is further complicated by the $10 billion in bitcoin and ether options set to expire Friday. The max pain level for bitcoin options sits at $72,000, well above the current spot price, suggesting options market makers could face minimal hedging pressure from the expiry. Bitcoin's market cap stood at $1.21 trillion, with its dominance rate at 54.2%, CoinGecko data shows.
This article is for informational purposes only and does not constitute investment advice.
