Following a small hiccup over the weekend, Bitcoin (BTC) began to rise softly on Monday after US President Donald Trump paused the proposed retaliatory 50% tariff on imports from the European Union until July 9.
Investor sentiment improved following the announcement, with European stock markets, initially shaken by the threat, responding positively. BTC reclaimed the $110,000 mark on May 26 but was unable to hold on to that level as the price slipped back below $109,000. The sluggish performance could be due to the US markets remaining closed in observance of Memorial Day.
While traders question whether Bitcoin could target a new all-time high beyond the $112,000 mark, rising institutional interest and robust derivatives markets indicate that traders are neither overleveraged nor concerned about a potential price correction for BTC.
Bitcoin Reclaims $110K After Trump Pauses Proposed Tariffs on the EU Until July
Bitcoin made its gains overnight, triggered by the Trump administration temporarily reversing EU tariffs. On Sunday, Trump threatened the continent with a 50% tariff on imported goods because he felt that discussions with European leaders were going nowhere and that the bloc was making it difficult for American products to be sold in the region due to various trade restrictions and “unfair” regulations.
European Commission President Ursula von der Leyen had a call with Trump, asking the US President to delay the levies until a comprehensive trade agreement was reached between the transatlantic partners. Trump agreed to extend the deadline until July 9, but the baseline rate of 10% will remain.
BTC Options Market Performance Points to Potential Run to New ATH
While the crypto market managed to reclaim some of the losses made over the weekend, demand for leveraged Bitcoin positions grew, as evidenced by the BTC futures premium increasing to 8% on May 26. Although this was a modest rise from 6.5% on the previous day, the metric remains in the neutral range of 5% to 10%. In December 2024, the Bitcoin future premium surged to 20% when the apex crypto surpassed the $100,000 mark for the first time in history.
Bitcoin options markets signal an increased probability of an upward movement, suggesting that whales and market makers remain confident as BTC is trading around 3% below its all-time high of $111,957. The 6% BTC options delta skew indicates that put (sell) options are trading at a discount, which is a typical characteristic of bullish markets, while readings closer to zero reflect a more balanced demand between put and call (buy) options – a trend observed on May 25.
Rising Institutional Interest is Averting the Risk of Bitcoin’s Price Dropping Substantially
Meanwhile, persistent institutional demand for Bitcoin is shifting the risk perception among institutional investors. On Monday, business intelligence firm Strategy, the largest corporate holder of BTC, disclosed that it acquired $427 million worth of coins between May 19 and May 25 at an average price of $106,237. During the same period, US-traded spot Bitcoin ETFs saw another $2.75 billion in inflows, bringing the total inflow so far in May to $5.3 billion.
Another significant bullish news came on May 19, when JPMorgan CEO Jamie Dimon announced during the bank’s Annual Investor Day event that it would allow clients to purchase Bitcoin ETFs via its services. While JPMorgan has no plans to custody BTC or any other cryptocurrencies, this move provides the bank’s $6 trillion in customer deposits with indirect BTC exposure.
Analysts Warn that Profit-Taking Outpacing Demand Inflow Could Result in Bitcoin Price Stalling or Reserving
In a Monday report, analysts at the Bitfinex exchange noted that BTC has entered a phase where traders are taking profits out of the almost 50% surge from the yearly lows of April, and increased profit-taking by short-term holders could be a reason for Bitcoin’s near-term upside being capped. This investor cohort has realized $11.4 billion in cumulative profits over the past 30 days, compared to $1.2 billion in the 30 days before that, according to the report.
The analysts hinted that a risk that could emerge from this trend is profit-taking outpacing new demand inflows, and unless there is a corresponding rise in new capital entering the market to “absorb this supply”, Bitcoin’s price may begin to stall or even retrace.
The report states that the next few days will be crucial to gauge whether Bitcoin’s price dipping to $106,000 has set the range lows or a much bigger reset is in the making. In case a price pullback occurs, the key level to watch is the short-term holder cost basis around $95,000 – the average price at which short-term holders bought BTC, the authors wrote.
*At the time of writing, Bitcoin (BTC) is trading at $108,632, down 0.91% in the last 24 hours.