Key Points:
BTC's resilience after a $19 billion flash crash on Friday indicates that, despite a rise in short-term risk aversion, long-term demand remains strong.
Derivatives traders are maintaining a cautious stance, with arbitrage opportunities and negative funding rates clearly indicating that counterparty risk is increasing.
Less than 48 hours after the flash crash on Friday, BTC regained the $114,000 mark, following a market turmoil that evaporated $15 billion from BTC futures open interest. Although BTC demonstrated significant resilience after such a major liquidity event, several factors may still delay its retest of the $125,000 level.
As long as investors continue to view BTC as a risk asset and maintain some correlation with tech stocks, sustained bullish momentum is likely to depend on stronger market confidence in the global economic growth outlook.
Experts point out that concerns over a potential economic slowdown, especially after new signs of weakness in the U.S. labor market, have made investors more risk-averse. According to The Wall Street Journal, Carlyle Group estimates that U.S. employers added only 17,000 jobs in September, down from an already weak 22,000 in August.
Demand for U.S. bonds has surged, with yields approaching 3.5%, as investors are willing to accept lower returns in exchange for the safety of government-backed assets. This market trend is further driven by concerns that trade tensions between the U.S. and China may escalate, with a temporary agreement on U.S. import tariffs set to expire on November 10.
U.S. President Donald Trump stated on Truth Social on Sunday that the delay "should be negotiated" as both countries pursue economic growth together. However, no substantial progress has been announced yet, aside from plans for talks between the two leaders.
U.S. Treasury Secretary Scott Bessent described China's export controls on rare earths as "provocative actions." Under new regulations introduced by China, foreign companies producing certain materials now need to apply for additional export licenses, even if Chinese companies are not directly involved. According to Reuters, China continues to dominate these critical market sectors for tech manufacturing.
Further exacerbating macroeconomic uncertainty is the ongoing U.S. government shutdown, which has led to delays in the release of key economic data, including consumer inflation reports and wholesale cost data. Analysts believe that this lack of market visibility complicates the Federal Reserve's policy outlook and prompts investors to adopt a more cautious stance ahead of Fed Chair Powell's important speech on Tuesday.
Regardless of how U.S.-China relations may improve, traders remain highly vigilant in the BTC derivatives market. Some markets still present arbitrage opportunities, such as discrepancies between perpetual contracts and spot prices on the same exchange. A noticeable reduction in market maker activity indicates that counterparty risk is rising.
The funding rate for BTC perpetual futures on the Binance platform remains negative, meaning that short positions incur leverage fees. Meanwhile, this metric has returned to a normal positive range on other exchanges, creating potential arbitrage opportunities in terms of rates.
Joe McCann, founder and CEO of Asymmetric Financial, pointed out on the X platform that "a very large market maker" may have been liquidated during Friday's crash, explaining the significant price gaps between exchanges and the "extreme dislocation" observed on Binance. Even if these situations are only temporary, traders may remain on the sidelines for an extended period, delaying their re-entry into the cryptocurrency market.
Other market participants have sharply criticized how exchanges handle liquidation triggers and derivatives pricing. Crypto.com CEO Kris Marszalek urged regulators to conduct a "comprehensive review of the fairness of trading practices," specifically highlighting issues such as system outages affecting only certain user groups and the lack of compliance measures for "internal trading."
The unique characteristics of BTC as an independent scarce asset have not been diminished by Friday's flash crash, which means it could still benefit from rising market demand for such assets. However, the apparent reduction in traders' short-term risk appetite may delay BTC's journey to new all-time highs by weeks or even months.
Related: Data shows Bitcoin (BTC) can withstand a 13% drop in 8 hours without issue
This article is for general reference only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in this article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Original: “Three Reasons Why a Bitcoin (BTC) Rally to $125K Could Be Delayed”
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