Derivatives Signal: Bitcoin Hasn’t Capitulated — Further Downside Possible
Derivatives expert Greg Magadini of Amberdata warns that Bitcoin has not yet entered a historical capitulation phase, suggesting further downside risk. Magadini highlights the 90‑day futures basis — the spread between futures and spot — as a key indicator. In the 2022 capitulation, 90‑day futures traded at about a 9% discount to spot; today the basis sits near a ~4% premium, comparable to risk‑free bond yields rather than distressed-market levels. Other derivatives metrics (elevated open interest, neutral-to-slightly-positive funding rates, balanced options skew, and limited liquidation volumes) point to cautious positioning rather than panic selling. Changes since 2022 — greater institutional ETF holdings, clearer regulatory frameworks and more mature derivatives markets — may mute extreme moves but could also alter or prolong bottoming processes. Magadini argues that without extreme basis widening and forced liquidations, a sustainable market bottom is unlikely. Traders should monitor basis, open interest, funding rates, options skew and liquidation flows for capitulation signals; macro or regulatory shocks and technical breakdowns could trigger further downside. This analysis is not trading advice.
Bearish
The article signals a bearish outlook because a key capitulation indicator — the 90‑day futures basis — is not displaying the extreme discount historically associated with market bottoms. Elevated open interest, neutral funding rates, balanced options skew and limited liquidations indicate positioning is cautious rather than panicked. Absent forced selling and basis widening, downside pressure can continue until derivatives markets show extreme pessimism. Past capitulation (2022) featured deep futures discounts (~9%), mass liquidations and rapid open‑interest declines; those conditions are missing now. While greater institutional ETF flows and improved regulation may dampen volatility over the long term, they can also delay bottoms and create protracted declines. Short term, traders should expect potential further downside if macro or regulatory shocks force deleveraging. Long term, the market may prove more stable but could form bottoms through a different, slower process driven by institutional flows rather than rapid retail capitulation.