Crypto relief rally fails to shake persistent bearish derivatives signal

The cryptocurrency market experienced a brief relief rally this week as Bitcoin and Ethereum bounced from their weekly lows amid positive momentum in U.S. equity indices. However, a detailed analysis of derivatives markets and trading flows indicates this growth may be merely a technical correction rather than the start of a new bullish trend. Investors remain cautious, while professional traders continue to hold predominantly short positions.

A key indicator of the current rally's weakness is the negative cumulative volume delta (CVD) — a metric that reflects the balance between aggressive buying and selling. Negative CVD values indicate that even during price increases, sell orders executed at market prices dominate. This means aggressive sellers are controlling the market, while buyers are only passively placing limit orders, showing no genuine confidence in continued growth.

Analysis of futures and options markets confirms bearish sentiment among professional market participants. Funding rates for perpetual futures remain close to neutral or slightly negative, which is atypical for a healthy bullish rally. Meanwhile, in the options market, there is heightened interest in put options (downside bets), particularly with strikes below current levels, indicating expectations of further price declines.

An important factor is the correlation between cryptocurrencies and traditional markets, specifically U.S. technology stocks. The current recovery in Bitcoin and Ethereum is almost entirely explained by positive dynamics in the S&P 500 and Nasdaq. Such high correlation makes cryptocurrencies vulnerable to any negative news from traditional markets, especially amid macroeconomic uncertainty related to inflation and Federal Reserve policy.

Technical analysis also provides no grounds for optimism. Bitcoin remains below key resistance levels, while trading volumes during the rally are significantly lower than during recent sell-offs. This is a classic sign of a bear market, where each recovery is used by participants to exit positions at better prices. Ethereum shows a similar pattern, with the ETH/BTC ratio continuing to face pressure.

Institutional flows also point to caution among major players. According to analysts, net outflows from Bitcoin ETFs continue, though they have slowed compared to previous weeks. This suggests institutional investors are using the current recovery to partially lock in profits or reduce exposure rather than increase positions.

For investors, the current situation demands particular caution. It is recommended to hold existing positions and not rush into new purchases on this bounce. Setting stop-losses below recent lows and monitoring CVD dynamics and futures funding rates is advisable. If these indicators do not improve soon, there is a high probability of retesting or breaking through weekly lows. Aggressive traders may consider short positions upon recovery to key resistance levels, but with strict risk management. Conservative investors should remain on the sidelines until convincing signs of trend reversal emerge.