I'm not sure we've actually seen a genuine capitulation in bitcoin yet, according to the derivatives specialist

Has Bitcoin Truly Reached Capitulation?

Roughly a week ago, bitcoin (BTC) experienced a sharp decline of over 10% in a single day, falling to approximately $60,000 before recovering to the $70,000 range. This dramatic movement has sparked debate: was this the point where investors gave in to panic selling, signaling the end of bearish momentum and the potential start of a new upward trend?

According to Greg Magadini, director of derivatives at Amberdata, the futures market suggests that a true capitulation has not yet occurred, and there may still be room for further declines.

Magadini explained in a recent market commentary that the absence of a significant shift in the futures basis makes him skeptical that the market has reached a genuine capitulation point.

He pointed out that, during periods of strong downward pressure and capitulation, futures contracts often behave differently compared to the spot market.

Understanding Bitcoin Futures and Market Sentiment

Futures are standardized agreements to buy or sell assets like bitcoin at a predetermined price on a future date. Traders use these contracts to speculate on price movements—going long if they expect prices to rise, or shorting if they anticipate a drop—without needing to own the underlying asset.

The gap between futures prices and spot prices, known as the basis, offers insight into overall market sentiment. A significant premium in futures over spot prices typically reflects bullish expectations, while a discount points to prevailing bearishness.

Historically, the end of bitcoin bear markets has been marked by both standard and perpetual futures trading at steep discounts compared to spot prices, signaling widespread capitulation and the final phase of a downturn.

Current Market Dynamics

Last week, bitcoin futures only briefly traded at a discount, lacking the sustained deep discounts seen in previous bear market lows.

Magadini noted, "Even though the 90-day basis fell with each downward move in BTC, the declines were modest, barely reaching -100 basis points. Currently, the fixed basis for BTC hovers around 4%, which is similar to risk-free treasury yields."

For comparison, at the close of the 2022 bear market, 90-day futures were trading at a 9% discount as bitcoin bottomed below $20,000. If historical patterns hold, bitcoin may still face another downward move, with futures traders eventually capitulating and pushing futures prices well below spot.

At present, bitcoin is trading near $69,000, reflecting a 1% decrease since midnight UTC, according to CoinDesk data.