#Crypto Market Rebound#  Bitcoin rallies to $109,700, but professional investors are nervous.

Bitcoin is trading near an all-time high, but derivatives data suggests investors remain cautious and uncertain.

A drop in USDT in China and outflows from spot Bitcoin ETFs reflect investor concerns about global trade tensions.

Bitcoin (BTC) briefly retested the $105,200 support level during the day on Wednesday before rallying above $109,000. The rally coincided with monetary easing data from the eurozone and signs of weakness in the U.S. labor market.

Although Bitcoin is just 2% below its all-time high, investors are reluctant to jump higher, according to BTC derivatives metrics. This caution has led some investors to question the sustainability of the rally.

On Wednesday, the Bitcoin futures premium remained below the neutral threshold of 5 percent. The slight increase from 4 percent on Monday was a continuation of the trend that began on June 11. That day, the indicator last approached the bullish zone, with Bitcoin testing $110,000.

Is Eurozone money supply behind Bitcoin’s rally?

While it is difficult to explain Wednesday’s rally with a single catalyst, the record high of M2 money supply in the eurozone in April likely played a significant role. According to data released on Monday, there was an increase of 2.7 percent on an annual basis, which coincides with the expansion of the US monetary base. Meanwhile, ADP data showed that private sector employment in the US decreased by 33,000 in June.

Some market participants attribute the weak demand for leveraged long positions in Bitcoin to the increasing risk of an economic recession. This has become especially evident as the global trade war intensifies. US President Donald Trump has threatened to raise import tariffs on Japanese goods to more than 30% if no deal is reached by July 9.

Eurozone ambassadors have instructed EU Trade Commissioner Maroš Šefčovič to take a tougher stance during his visit to Washington this week. European capitals have reportedly demanded a reduction in the current 10% reciprocal tariff, but internal disagreements continue over whether to retaliate.

Neutral Bitcoin options markets and weak stablecoin demand in China

To understand whether the slowdown in Bitcoin derivatives markets is limited to futures, it may be useful to look at BTC options markets. If investors were expecting a sharp decline, the 25 delta slope would have risen above 6%, as put options would earn a higher premium than call options.

The slope metric is currently at 0%, unchanged from two days ago. This suggests that investors have a balanced perception of risk in price action. This indicates an indecisive market sentiment at $109,000, but it is an improvement from the bearish sentiment on June 22.

While the price of Bitcoin has reached its highest level in the last three weeks, demand for cryptocurrencies in China has fallen sharply over the stablecoin premium.

Tether (USDT) trading at a discount to the official US dollar exchange rate in China is usually a sign of fear, as it indicates that investors are exiting the crypto market. In contrast, strong demand for cryptocurrencies usually pushes stablecoins above their value. The current 1% discount is the highest since mid-May and suggests a lack of confidence in Bitcoin’s recent rally.

Investors are increasingly concerned about the potential negative impact of the ongoing tariff war. This was made even more apparent by the net outflow of $342 million from spot Bitcoin ETFs on Tuesday. As a result, the slump in the derivatives market is paralleled by general macroeconomic uncertainty.

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