The public contemplation by the US Federal Reserve regarding the reduction of interest rate cuts in 2025 has led to several adverse impacts on financial markets. In addition to a 17% depreciation for Bitcoin, data from Binance exchange reveals that the BTC market has now formed its most significant spot-perpetual price gap.
Bitcoin Spot-Perpetual Gap Declines To -$59 – What’s Next?
Last week, the Fed proposed potential reductions of its initially planned four rate cuts in 2025 to two, initiating a massive selloff in the global financial markets. As the overall crypto market capitalization fell by 17.4%, over $1.8 trillion was erased from the stock market in a single day as investors sought to unload high-risk assets from their portfolios, marking the most significant daily drop since March 2020.
In the Bitcoin market, CryptoQuant analyst Darkfost reports a significant rise in selling pressure from the derivatives sector, leading to a spot-perpetual price gap of -$59.14, the largest recorded in BTC’s history.
To clarify, the spot-perpetual price gap illustrates the difference between the price of a cryptocurrency on the spot market (where an asset is exchanged directly) and its perpetual futures price (contracts speculating on an asset’s future valuation without an expiry date).
A negative gap signifies that perpetual futures are trading at a price lower than the spot market, indicating a pessimistic attitude among derivatives traders. Hence, the currently highly negative spot-perpetual price gap of -$59.14 implies that derivatives traders anticipate a short-term drop in Bitcoin’s value.
Nonetheless, Darkfost observes that historical data shows spot-perpetual price gaps tend to reverse as markets stabilize. Thus, extremely negative gaps like the current one often present solid buying opportunities since markets generally overreact during periods of heightened uncertainty before a rebound occurs.
BTC Investors Report Over $5.72 Billion Profit Despite Price Drop
In related developments, crypto analyst Ali Martinez reports that the Bitcoin market experienced over $5.72 billion in realized profit during the latest market downturn. This suggests that a considerable segment of Bitcoin holders were still in profit prior to the price correction, which led to profit-taking.
While large realized profits might indicate a cautious or bearish short-term outlook, they also imply that Bitcoin’s earlier price surge was substantial enough to benefit many investors who maintain confidence in a robust bullish framework that is sustainable over the long haul.
At the moment of writing, Bitcoin is priced at $97,182 with a 0.83% gain over the past day. However, the trading volume of the asset has decreased by 50.28%, now standing at $54.23 billion.
Featured image from Economic Times, chart from Tradingview
