Regulating crypto is coming, but traders are still buying dips. Although the premium on CME Bitcoin futures has been reduced to zero. Data reveals that professional traders remain bullish.
When looking at the Bitcoin (BTC) chart from a weekly or daily viewpoint. It’s evident that the cryptocurrency’s price has been constantly making lower low. Since hitting an all-time high of $69,000 in December.
Surprisingly, the price peak on November 10 coincided with the announcement by the United States. That inflation had reached a 30-year high. However, the mood swiftly shifted as investors were concerned. About the default of China-based real estate developer Evergrande on its loans. It appears that this has had an impact on the overall market structure.
Traders fear stablecoin regulation
Stablecoin issuers were subjected to unrelenting pressure from authorities and policymakers. Following the completion of this initial correction phase. In the first instance, the Securities and Exchange Commission of the United States. Rejected VanEck’s spot Bitcoin exchange-traded fund on November 12. The denial was directly tied to the belief that Tether’s stablecoin. USDT, was bankrupt, as well as concerns about Bitcoin’s price manipulation. All of which were expressed at the time.
On December 14, the Senate Banking, Housing, and Urban Affairs Committee held a hearing. On stablecoins that focused on consumer protection and the risks. Associated with them, and on December 17, the Financial Stability Oversight Council. Expressed its concern about the adoption of stablecoins and other digital assets in the United States. This recommendation made in the report: “The Council advises that state. And federal regulators explore available regulations and mechanisms. That could applied to digital assets.”
The worsening sentiment among investors was reflected in the premium paid. By the CME for Bitcoin futures contracts. The metric gauges the difference between the current spot price in conventional markets. And the price of longer-term futures contracts.
When this indicator begins to fade or becomes negative, it considered an ominous red flag. Backwardation is a term use to describe a situation. In which there is a strong bearish mood in the market.
These fixed-month contracts typically trade at a modest premium, indicating that sellers. Are demanding a higher amount of money in exchange. For delaying settlement for a longer period of time. In a healthy market, futures should trade at a premium of 0.5 percent.
It’s important to note how the indicator dropped below the “neutral” level. After December 9. when Bitcoin fell below $49,000 and Regulating crypto is coming.
Top traders raise bullish bets
The long-to-short net positioning of traders is highlighted by data provided. By the exchange. By examining each client’s position in spot, perpetual, and futures contracts. One can have a better understanding of whether professional traders. Are leaning bullish or bearish in their outlook.
Because there occasionally inconsistencies in the methodology used by different exchanges. Viewers should focus on changes and It’s important to note how the indicator dropped below the “neutral” level. After December 9, when Bitcoin fell below $49,000 and regulating crypto is coming rather than absolute values. When watching the market.
Despite Bitcoin’s 19 percent decline since December 3, major traders on cryptocurrency exchanges. Such as Binance, Huobi, and OKEx have boosted their leverage long positions. To be more specific, Binance was the only exchange that saw a minor decrease. In the long-to-short ratio of its top traders. Estimate 1.09 has changed to 1.03 as a result of this change. OKEx traders, on the other hand, increased their optimistic bets from 1.51 to 2.91. In just two weeks, more than offsetting the negative impact of the market.
The absence of a premium in CME two-month future contracts. Should not be interpret as a “red flag,” given that Bitcoin is currently approaching. The $46,000 resistance level, which represents its lowest daily close. Since Oct. 1, 2017. Furthermore, leading traders on derivatives markets. Have expanded their long positions despite the decline. In the price of the underlying asset.
Stablecoin issuance and transactions are unlikely to curtailed in the near future. But the United States government is powerless to prevent them from taking place. These corporations can relocate outside of the United States and operate solely. On the basis of dollar-denominated bonds and assets, rather than cash.