Bitcoin's price has surged back above $71,000, marking a significant recovery from recent lows. However, despite this impressive rebound, metrics from the derivatives market indicate that professional traders remain cautious about the sustainability of this rally. The uncertainty raises questions about whether the recent sell-off is truly over. Key takeaways from the current market conditions highlight a noticeable caution among traders. The options skew has hit 20%, suggesting that many are wary of another wave of liquidations. Although Bitcoin has made a remarkable 17% gain since dipping to $60,150 last Friday, the demand for higher price exposure around the $70,000 mark remains limited. This hesitance is further exacerbated by fears of significant liquidations, amounting to $1.8 billion in leveraged futures contracts over just five days. This situation indicates that some major hedge funds or market makers may have faced severe losses.

In contrast to the shocking October 2025 market collapse, which saw a staggering $4.65 billion in Bitcoin futures liquidations, the current price weakness has demonstrated a more gradual decline over three consecutive weeks. Interestingly, bulls have been actively adding positions between the $70,000 and $90,000 range, even as aggregate futures open interest has remained flat at approximately 527,850 BTC, reflecting minimal changes from the previous week. Still, the notional value of these contracts has plummeted from $44.3 billion to $35.8 billion, which aligns with the 21% decline in Bitcoin's price over the past week.

To gauge whether larger players like whales and market makers have shifted to a more bullish stance, one must analyze the BTC futures basis rate. This metric reveals the price difference between futures contracts and regular spot contracts. Under normal conditions, the premium should be between 5% and 10% annualized to compensate for the extended settlement period. Currently, the BTC futures basis rate has dropped to just 2%, its lowest level in over a year. This lack of demand for bullish leverage is somewhat expected; however, it indicates that bulls may take longer to regain confidence, especially given Bitcoin's current valuation, which is still 44% below its all-time high.

The extreme fear reflected in Bitcoin's derivatives metrics is also evident in the options markets. An overwhelming demand for put options indicates bearish sentiment among traders. This demand has pushed the skew metric above 6%, which is alarming. Conversely, when traders experience fear of missing out, they tend to pay a premium for call options, flipping the skew metric into negative territory. Recently, the skew metric reached 20%, a level that rarely lasts and typically signals market panic. For context, the skew was at 11% on November 21, 2025, following a 28% price correction.

The current downturn lacks a specific catalyst, which has intensified fear and uncertainty within the market. Traders may speculate about whether a major market maker, exchange, or hedge fund has gone bankrupt, contributing to the erosion of market confidence. This sentiment implies a high likelihood of further price declines, making sustained bullish momentum seem increasingly improbable. As Bitcoin's derivatives metrics continue to indicate extreme fear, the outlook for the cryptocurrency remains uncertain.

Investors are advised to remain cautious and conduct thorough research before making any trading decisions. While the information provided aims to be accurate and timely, it is essential to acknowledge the inherent risks associated with investments and trading. No guarantees can be made regarding the accuracy or reliability of the information presented. As the market evolves, staying informed will be crucial for anyone looking to navigate the complexities of cryptocurrency trading.