The US Federal Reserve’s public contemplation of cutting interest rates in 2025 has had several negative effects on financial markets. Aside from the 17% Bitcoin price loss, data from the Binance exchange shows that the Bitcoin market has now developed its largest permanent price gap.
Bitcoin Permanent Spot Gap Drops to -$59 – What’s Next?
Last week, the Federal Reserve announced the potential reduction of its originally scheduled four interest rate cuts in 2025 to two, triggering a widespread sell-off in global financial markets. With the total cryptocurrency market capitalization falling by 17.4%, more than $1.8 trillion was lost in the stock market in a single day as investors looked to unload risky assets in their portfolios, marking the worst daily decline since March 2020.
For the Bitcoin market, CryptoQuant analyst Darkfost Reports Noticeable increase in selling pressure from the derivatives market, resulting in a permanent price gap of -$59.14, the largest ever in Bitcoin history.
For context, the perpetual spot price gap represents the difference between the price of a cryptocurrency in the spot market (where the asset is traded directly) and the price of perpetual futures (contracts that speculate on the future value of the asset without expiration).
A negative gap means that perpetual futures contracts are trading at a lower price than the spot market, indicating bearish sentiment in the financial derivatives market. Therefore, a very negative perpetual spot price gap of -$59.14 indicates that derivatives traders are anticipating a short-term decline in the price of Bitcoin.
However, DarkFost points out that persistent price gaps in spot prices are historically more likely to reverse as markets stabilize. Therefore, very negative gaps like the one currently displayed are often good buying opportunities as markets tend to overreact during periods of heightened uncertainty before a recovery occurs.
BTC investors record profits of more than $5.72 billion amid falling prices
In other news, cryptocurrency analyst Ali Martinez Reports The Bitcoin market saw more than $5.72 billion in profits made during the recent market collapse. This indicates that a significant portion of Bitcoin holders made profits before the price correction, resulting in profit taking.
While the large profits made could indicate a cautious or bearish sentiment in the short term, they also indicate that Bitcoin’s earlier price rally was large enough to benefit many investors who believe in a strong, sustainable bullish structure in the long term.
At the time of writing, Bitcoin is valued at $97,182 with a gain of 0.83% in the past day. However, the asset’s trading volume declined by 50.28% and was valued at $54.23 billion.
Featured image from Economic Times, chart from Tradingview