Background Information: Bitcoin prices rebounded this week to approximately 110 thousand USD, primarily driven by short-term cover buying, but traders remain cautious as prices approach historical highs. The shift to negative funding rates indicates a "skeptical" sentiment in the market. Macroeconomic data and uncertainty ahead of the Federal Reserve meeting have further heightened market caution.

Key Events:
- Vetle Lunde, head of research at K33, pointed out that Bitcoin funding rates and leverage indicators show strong market defensiveness; negative funding rates typically signal subsequent upward movement.
- The leveraged Bitcoin ETF BITX's holdings are below the peak seen in December last year, with stable capital inflows, reflecting investor caution.
- For Ethereum, the 2x leveraged Ethereum ETF (ETHU) by Volatility Shares dominates the derivatives market, with holdings significantly increasing, indicating strong market demand for Ethereum long leverage.
- Alexia Theodorou, head of derivatives at Kraken, stated that Ethereum perpetual contract holdings have reached an all-time high, with increased speculative activity; however, the market has yet to form a clear direction, and traders are more prepared to manage volatility.
- Ethereum's price rose 5.4% over the past week but remains about 43% below its historical peak.

Potential Impacts:
- Bitcoin market caution and negative funding rates may lay the foundation for the next upward rally.
- Ethereum market leverage demand and improving regulatory environment suggest it could receive structural benefits in the future.

Special Note: SoSoValue was mentioned in the content.

Bitcoin surged back toward $110,000 this week amid a wave of short covering after last Thursday's Trump–Musk spat sent it plunging to $100,500. Yet, even near all-time highs, BTC traders remain wary as funding rates turn negative in a sign of "disbelief." With macro jitters rising ahead of today's CPI data and next week's Fed meeting, that caution might just be the setup for the next breakout, according to K33.Bitcoin funding rates and leverage indicators across platforms point to sustained defensiveness, K33 Head of Research Vetle Lunde wrote in a Tuesday report. Binance's BTC/USDT perpetuals averaged negative daily funding on Friday and Sunday, while weekly funding rates sat at just 1.3% annualized — levels only seen near local bottoms over the past two and a half years. Historically, bitcoin does not top during periods of negative funding; instead, such positioning often precedes further upside, he noted.That risk-off tone extends beyond futures markets. The Volatility Shares 2x leveraged long Bitcoin exchange-traded fund, BITX, holds just 52,435 BTC in exposure — well below its December peak of 76,755 BTC. Unlike prior rallies in March and November 2024, inflows to BITX have remained flat over the past 30 days. The lack of leveraged flows, combined with soft funding, signals investor skepticism — a setup that could fuel bitcoin's next leg higher, Lunde said.Meanwhile, Volatility Shares' 2x leveraged Ethereum ETF has taken a commanding role in the ETH derivatives market, accounting for an overwhelming portion of both U.S. Ethereum ETF flows and CME's ETH open interest over the past two months, Lunde noted. Since April 8, the fund has added 305,100 ETH in exposure — more than the 295,250 ETH increase in CME ETH OI during that time — meaning that, without it, the market would've seen a net decline, he said.ETHU's notional exposure is now equivalent to 18.3% of the ETH held by all U.S. spot Ethereum ETFs and two-thirds of CME's ETH OI. By comparison, BITX represents just 4.3% of U.S. spot Bitcoin ETF holdings and one-third of CME's BTC OI. It's also the second most popular Ethereum ETF this year, trailing only BlackRock's ETHA, with the dominance of ETHU reflecting a "thirsting for leverage" on long ETH exposure that has yet to materialize in bitcoin markets, Lunde said.That view is mirrored by Kraken Head of Derivatives Alexia Theodorou, but a double-edged sword in terms of potential price action. "Open interest in ETH perpetuals on Kraken reached an all-time high of 30,000 ETH earlier this week, signaling a notable uptick in speculative activity around the second-largest cryptocurrency by market cap," Theodorou told The Block."This surge follows sustained institutional inflows into spot ETFs. While funding rates remain mildly bullish, the market has yet to form a clear directional consensus, with the long/short ratio still well below its January peak," she said. "This suggests traders are positioning for volatility rather than expressing strong conviction on ETH's short-term price trajectory. Encouragingly, recent signals from U.S. regulators indicating a more innovation-friendly stance toward DeFi could act as a structural tailwind for ETH in the months ahead."Ethereum is up 5.4% over the past week, according to The Block's ETH price page, currently trading for around $2,766. However, it remains approximately 43% down from its all-time high.

Bitcoin traders remain cautious as prices approach historical highs, while leveraged bets on Ethereum surge, analysts say.