Bitcoin price discovery shifts to derivatives as spot demand fades

A large crypto trader expanded existing shorts by opening new positions worth approximately $119m in Bitcoin, and other major digital assets on 29 December. 

The trader placed more than $250 million in leveraged bearish positions as U.S. spot market demand shows little sign of absorbing sell pressure.

On-chain analytics firm Lookonchain flagged the activity on Monday, noting that the trader also expanded short positions worth $106m in Ethereum and $43m in Solana within a five-hour window.

The trades were executed via perpetual futures, indicating a derivatives-led positioning strategy rather than outright spot selling.

Weak spot Bitcoin demand leaves downside pressure unabsorbed

The timing of the short build-up coincides with continued weakness in U.S. spot market demand. 

Data from the Coinbase Bitcoin Premium Index shows the indicator remaining firmly negative at -0.086. The position indicates that Bitcoin is trading at a discount on Coinbase relative to offshore exchanges.

Source: Coinglass

Historically, a negative premium suggests subdued buying interest from U.S.-based investors. This includes institutions that typically access the market through regulated spot venues.

In this context, sell pressure introduced through derivatives markets faces limited immediate absorption from spot buyers.

Leverage increases, but no forced selling yet

Despite the size of the positions, Bitcoin’s price action has remained relatively contained, drifting lower without sharp breakdowns or volatility spikes. As of this writing, it was trading at around $87,540, with a weak gain. 

Source: TradingView

This points to a market environment characterised by controlled de-risking rather than capitulation, where leverage is increasing but forced liquidations remain limited.

The absence of panic-driven selling reduces the likelihood of sudden price dislocations. However, it also allows large short positions to persist longer than they would in a high-demand spot environment.

What the positioning suggests for Bitcoin

Rather than reflecting an outright crash thesis, the data indicates a tactical bearish stance built on weak spot participation, particularly in the U.S. market. 

Without a resurgence in spot demand, typically visible through a sustained positive Coinbase premium, leveraged positioning is likely to continue exerting outsized influence on near-term price behaviour.

For now, the balance of evidence suggests that downside pressure is primarily expressed through derivatives, while spot markets remain largely passive.

Final Thoughts

• Large, leveraged short positions can persist when spot demand is weak, allowing derivatives markets to dominate short-term price action.
• A sustained recovery would likely require renewed U.S. spot buying to absorb sell pressure and challenge bearish positioning.