Derivatives risk score reaches extreme pessimism, Jamie Coutts notes

Derivatives risk score reaches extreme pessimism, Jamie Coutts notes
Derivatives risk score at extreme lows

Bitcoin derivatives market is showing signs of heightened pessimism, as highlighted by Jamie Coutts. His Derivatives Risk Score recently hit the lowest level of 1, which he describes as excessive pessimism.

Coutts also noted that the 7-day moving average of the funding rate is in the 3rd percentile of all readings since 2020. He reviewed historical data and found 14 episodes of sustained negative funding in Bitcoin's history, suggesting a notable recurring pattern despite the small sample size.

Coutts previously described how on-chain DeFi derivatives reached $7.5 trillion in annual volume amid rapid sector growth. He has also examined how Bitcoin's value zones are determined probabilistically and do not always pinpoint market bottoms. These earlier observations provide additional context for his outlook on current market sentiment.

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