No clear direction despite Bitcoin’s 45% drop… “Either a sharp rally or a steep selloff is possible”
Summary
- With Bitcoin down 45.8% from its all-time high, the analysis said the market could enter a phase of abrupt volatility as a derivatives-driven leverage structure strengthens.
- While the ratio of Bitcoin futures (perpetuals) to spot trading has risen to around 15x, funding rates and volatility show no clear directional bias—typical of a compression pattern, it said.
- As a prolonged Iran conflict fuels higher oil prices and rate-hike expectations, capping risk-asset upside, it noted that easing diplomatic tensions could trigger a short-covering rally, while an escalation could leave room for a drop into the $50,000 range.
Forecast Trend Report by Period
With Bitcoin (BTC) down about 45% from its all-time high, an analysis suggests the market could be entering a phase of abrupt volatility as a derivatives-driven leverage structure strengthens.
On the 31st, crypto (cryptocurrency) market maker Wintermute said on X (formerly Twitter) that “the market is currently in a directionless state of accumulated leverage, sitting in a compressed-energy zone,” adding that “depending on the catalyst, there is a high likelihood of a sharp move—either up or down.”
According to the report, Bitcoin is down 45.8% from its all-time high, and a key debate in the market is whether the current cycle is progressing faster than in the past. Given that in the 2017 and 2021 cycles it took roughly about a year from the peak to form a bottom, the possibility is also being raised that the market is still in the early stages of a downcycle.
A notable feature is the sharply increased influence of the derivatives market. The ratio of Bitcoin futures (perpetuals) to spot trading has risen to around 15x, implying that prices are being driven more by leveraged positioning than by underlying cash flows.
However, the direction of flows remains unclear. Funding rates have been alternating between positive and negative without forming a consistent trend, while volatility also appears to be converging at low levels. Wintermute described this as “a classic compression pattern—high leverage without directional consensus.”
The macro backdrop is also acting as a headwind. With the protracted Iran conflict, rising oil prices and expectations of rate hikes are being priced in simultaneously, capping upside across risk assets. In fact, Bitcoin fell about 3% on the week, breaking below the $70,000 support line, while Ethereum also slipped under $2,000.
Wintermute said that “the current structure is not one that assumes a gentle trend, but rather a market that presupposes ‘sharp volatility,’” adding that “if diplomatic tensions ease and oil prices fall, a short squeeze could drive prices higher, but if tensions escalate, the door is also open to a drop into the $50,000 range.”
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.
