3 reasons why a Bitcoin rally to $125K could be delayed

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Key takeaways:

  • Bitcoin’s indomitable resilience after Friday’s disastrous $19 billion flash crash reveals that long-term demand is as unshakable as a Victorian-era belief in the superiority of the English breakfast tea – even when faced with short-term hesitancy.

  • Derivatives traders, ever the cautious souls, continue to tiptoe around the marketplace, with arbitrage opportunities and negative funding rates suggesting that even the boldest of hearts are wary of counterparty risks. No one likes a surprise, after all.

Ah, Bitcoin. The digital currency that bounces back faster than a cat on a hot tin roof, reclaiming the $114,000 mark less than 48 hours after Friday’s catastrophic flash crash. Truly, it was a performance worthy of applause – especially given that $15 billion vanished into the ether, like a magician’s misdirected trick. But despite such impressive resilience, several factors may still play the villain and delay Bitcoin’s potential ascension to the $125,000 throne.

As long as Bitcoin continues to be treated as a mere risk asset – a rowdy cousin of the tech stocks – its bullish future will likely depend on whether the global economic growth fairy grants it a wish. For now, patience, my dear friends, patience.

The US Job Market and US-China Drama: The Unsung Villains of Bitcoin’s Rise

Oh, what a tangled web we weave when economic data starts to disappoint. Particularly when it comes from the US job market, where the most recent signs of weakness have made investors more cautious than a fox in a henhouse. Carlyle estimates that US employers added a mere 17,000 jobs in September – quite the drop from the paltry 22,000 in August. Not exactly the roaring success one might hope for.

Job market data image

As if that wasn’t enough to spook the markets, demand for US bonds surged, sending yields soaring near 3.5% – a clear signal that investors are willing to take lower returns, just to wrap themselves in the comforting safety of government-backed assets. How cozy.

The US-China trade war, meanwhile, simmers like an uninvited dinner guest. Tensions are mounting, with the temporary truce on US import tariffs set to expire on Nov. 10. US President Donald Trump, bless him, posted on Truth Social (because where else?) that a truce extension “should be worked out.” No developments yet, but isn’t it just delightful when global relations take a turn for the dramatic?

Meanwhile, US Treasury Secretary Scott Bessent has described China’s rare earth export controls as “provocative.” If you’re wondering why, it’s because China’s new regulations are tighter than the corset of a Victorian debutante – and foreign companies must now acquire export licenses for materials that even China’s own firms don’t require. The world of rare earth materials, critical to tech manufacturing, remains firmly in China’s grasp.

Let’s not forget the US government shutdown, which has delayed the release of key data, including consumer inflation reports and wholesale costs. It’s as if the economic crystal ball has been put away in a drawer for the time being. All of this adds to the uncertainty and leaves investors clutching their pearls before Fed Chair Jerome Powell’s speech on Tuesday.

Liquidity Gaps in BTC Derivatives and the Fear of Regulatory Foes

In case you thought it couldn’t get any more suspenseful, behold the Bitcoin derivatives market, where caution reigns supreme. Arbitrage opportunities are lingering like shadows in the corners, with differences between perpetual contracts and spot prices hanging in the air like the faintest scent of danger. The market makers, bless their hearts, are scarce, adding to the tension and increasing counterparty risk.

Derivatives gap image

Meanwhile, on Binance, the perpetual futures funding rate for Bitcoin remains negative. The bears are paying for the pleasure of holding short positions, a situation so absurdly inverted that one could almost imagine a Shakespearean tragedy unfolding. Elsewhere, the rates have returned to a more traditional positive range, offering traders a juicy opportunity for arbitrage.

Funding rate image

Joe McCann, the wise and seasoned founder of Asymmetric Financial, suggested that a “very large market maker” might have met a gruesome fate during Friday’s crash, explaining the dramatic price gaps across exchanges. The dislocation, especially on Binance, was as shocking as finding a mouse in your teapot. And even if these dislocations are fleeting, traders are likely to wait longer before diving back into the tumultuous waters of the cryptocurrency market.

Of course, others have had their say, criticizing the handling of liquidation triggers and pricing on exchanges. Crypto.com’s CEO Kris Marszalek has called for regulators to conduct a “thorough review of the fairness of practices.” One might say that in the world of Bitcoin, fairness is a rare commodity – like a unicorn in a snowstorm.

Nevertheless, Bitcoin’s essential qualities, which allow it to bask in the growing demand for scarce, independent assets, remain unaffected by Friday’s flash crash. The only problem now? Traders have grown skittish, and that’s the sort of mood that could delay the much-anticipated $125,000 rally for weeks or even months. Let us all pray for the return of trader optimism – or at least a few brave souls willing to throw caution to the wind.

This article is for general information purposes and is not intended to be, nor should it be taken as, legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author, and do not necessarily reflect the views or opinions of CryptoMoon.

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2025-10-14 01:47