Key takeaways:

• Bitcoin’s resilience after Friday’s $19 billion flash crash shows long-term demand remains strong despite short-term risk aversion.

• Derivatives traders remain cautious, with arbitrage opportunities and negative funding rates signaling heightened counterparty risk.

Bitcoin (BTC) reclaimed the $114,000 mark less than 48 hours after Friday’s flash crash, which wiped out $15 billion from BTC futures open interest. While Bitcoin showed resilience after such a major liquidity event, several factors could still delay a retest of the $125,000 level.

As long as investors continue to view Bitcoin as a risk asset and maintain its partial correlation with tech stocks, sustained bullish momentum will likely hinge on stronger confidence in global economic growth.

US job market data and US-China relations negative impact on Bitcoin’s price

Concerns about a potential economic slowdown, particularly after new signs of weakness in the US labor market, have made investors more risk-averse. Carlyle estimates that US employers added 17,000 jobs in September, down from an already soft 22,000 in August, according to The Wall Street Journal.

Demand for US bonds surged, pushing yields close to 3.5% as investors accepted lower returns in exchange for the safety of government-backed assets. The move was further driven by growing concerns that the trade war between the United States and China could intensify on Nov. 10, when the temporary truce limiting US import tariffs is set to expire.

US President Donald Trump wrote on Truth Social on Sunday that an extension “should be worked out” as both countries pursue economic growth. However, no concrete developments have been announced beyond plans for talks between the two leaders.

US Treasury Secretary Scott Bessent described China’s rare earth export controls as “provocative.” Under new Chinese regulations, foreign companies producing certain materials will now need an additional export license, even when Chinese companies are not directly involved. China continues to dominate these markets, which are critical to tech manufacturing, according to Reuters.

Further macroeconomic uncertainty stems from the ongoing US government shutdown, which has delayed the release of key data, including the consumer inflation report and wholesale costs. This lack of visibility complicates the US Federal Reserve’s outlook and has made investors more risk-averse ahead of Fed Chair Jerome Powell’s speech on Tuesday.

Liquidity gaps in BTC derivatives and risk of regulatory security

Regardless of the prospects for improvement in US-China relations, traders remain highly cautious with Bitcoin derivatives. Some markets still present arbitrage opportunities, such as differences between perpetual contracts and spot prices on the same exchange. The limited activity from market makers signals heightened counterparty risk.

The Bitcoin perpetual futures funding rate at Binance remains negative, meaning shorts (bearish positions) pay for leverage. Meanwhile, the indicator has returned to a normal positive range on other exchanges, creating potential arbitrage opportunities on rates.

Joe McCann, founder and CEO of Asymmetric Financial, said on X that “a very large market maker” must have been wiped out during Friday’s crash, which would explain the sharp price gaps across exchanges and the “insane dislocations” on Binance. Even if these assumptions prove short-lived, traders will likely wait longer before re-entering the cryptocurrency market.

Related: Centralized exchanges face claims of massive liquidation undercounts

Other market participants sharply criticized how exchanges handled liquidation triggers and derivatives pricing. Crypto.com CEO Kris Marszalek urged regulators to “conduct a thorough review of the fairness of practices,” pointing to downtimes affecting only certain users and the absence of compliance measures on “internal trading.”

Bitcoin’s unique qualities, which allow it to potentially benefit from rising demand for independent scarce assets, were not affected by Friday’s flash crash. However, traders’ short-term risk appetite has clearly diminished, which could delay the journey to a new all-time high by several weeks or months.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.