Bitcoin Enters April With Positive Flows but Thin Conviction

MARKET SNAPSHOT

April opened on a positive note for bitcoin. End-of-month flows for exchange-traded funds (ETFs) and digital asset trusts (DATs) turned positive, fuelled by a re-positioning into  all risk assets, as well as dividend-driven purchases.

BTC ETF flows on 30 March were +$69.4 million. The first net-positive ETF session in two weeks, followed by +$114 million on 31 March. 

The flow composition on 30 March however warrants scrutiny: ARKB led with $33 million, FBTC contributed $28.9 million, and IBIT recorded a modest $7.5 million. While the positive headline figure reverses the immediate outflow streak across BTC ETFS, IBIT, which posted its largest single-session outflow on 27 March, (−$201.5 million), is up only marginally, reflecting just tentative enthusiasm in the  institutional bid through the BlackRock vehicle.

Quarter-end rebalancing on 31 March is also a structural factor worth acknowledging. Since bitcoin outperformed equities during Q1 2026 (on a relative basis), institutional allocation models may have automatically trimmed other exposure and added to BTC and bond positions (both of which were outperforming) on the last trading day of the quarter.

Derivatives Markets Remain Cautious

Funding rates have sat in negative territory for most of Q1 on an aggregated basis. That negativity persists even as bitcoin attempts to stabilise following the recent price drawdown, pointing to a prevalent short-positioning bias where traders are willing to pay a premium to maintain downside exposure.

The continuation of negative funding underscores a cautious derivatives environment. Unlike previous recovery cycles where funding swiftly normalised or turned positive alongside improving sentiment, market participants are showing reluctance to re-enter long positions aggressively, despite the improving price structure.

There are now additional liquidation clusters beneath current price levels, concentrated primarily around the $66,500 level.

From a positioning standpoint, this extended negative funding could act as a catalyst for a squeeze, given the crowded short bias, should upward momentum strengthen. It also signals, however, that conviction in the nascent recovery remains limited, particularly among leveraged speculators.

The current market architecture points to a derivatives environment that remains overtly defensive, with risk skewed heavily towards short exposure, notwithstanding evidence of stabilisation in both spot prices and ETF flows.

The BTC options market exhibits a range-bound, mean-reverting profile in at-the-money (ATM) implied volatility (IV), mirroring spot price action. The front end of the curve remains the most reactive to immediate macro developments and short-term news flow. The one-week tenor, while more sensitive, continues to trade within a relatively constrained range, oscillating between the low and high 50s.

Further along the curve, IV is notably compressed below 50 percent, with minimal dispersion across maturities. This overarching compression suggests the market is awaiting a significant catalyst to drive a directional repricing of risk. The contained levels observed in longer-dated tenors indicate no structural shift in long-term risk perception; current adjustments are short-term and driven primarily by activity at the front of the curve. Market participants are using volatility tactically to navigate near-term uncertainty, rather than expressing conviction on a longer-term directional view.