About a week ago, bitcoin plunged more than 10% in a single day, briefly touching $60,000 before rebounding to $70,000. The question is whether that drop marked true "capitulation" — a panic-driven sell-off that exhausts bearish pressure and sets the stage for a new bull run.
According to Greg Magadini, director of derivatives at Amberdata, the answer is no. In a Monday market note, he pointed to the lack of reaction in the futures basis. "[The] lack of 'reaction' in the futures basis doesn't make me confident we hit a true CAPITULATION moment," he said.
Futures Basis: A Window Into Market Sentiment
Futures are standardized contracts to buy or sell an underlying asset like bitcoin at a predetermined price on a future date. Traders use them to bet on price direction — buying when they expect a rally or shorting when they anticipate a decline. The difference between futures and spot prices, known as the basis, reveals market sentiment and positioning. A significant premium signals bullish optimism; a discount indicates bearish pressure.
Historically, bitcoin bear markets tend to bottom out when standard and perpetual futures trade at deep discounts to spot on major exchanges. Such massive discounts represent capitulation and mark the final flush of the bear cycle.
Last week, however, futures slipped into a discount only for a brief period. "Although the 90-day basis dropped lower on each leg down for BTC, these moves barely ranged -100bps. Today, fixed basis remains around 4% for BTC (inline with risk-free treasury yields)," Magadini explained.
Compare that with the end of the 2022 bear market, when the 90-day futures traded at a 9% discount as bitcoin bottomed below $20,000. If history is a guide, bitcoin could see another leg lower where futures traders capitulate, pushing prices into a steep discount relative to spot.
Bitcoin recently changed hands near $69,000, down 1% since midnight UTC, according to CoinDesk data.