The move followed a seven-day correction of 8% in S&P 500 futures after US Federal Reserve Chairman Jerome Powell issued hawkish statements following a December 14 interest rate hike.

Bitcoin price is falling to guide support
Macroeconomic trends have been the main driver of recent moves. For example, the recent bounce from the five-week ascending channel support at $16,400 was attributed to the BoJ’s efforts to contain inflation.

12-hour Bitcoin price index, in USD. Source: TradingView
The Bank of Japan increased the maximum yield on government bonds on December 20, which are now trading at levels not seen since 2015.

Not all was positive for Bitcoin, however, as miners struggled as the hash rate neared all-time highs and energy costs soared. For example, on December 20, bitcoin miner Greenidge reached an agreement with its creditor to restructure $74 million in debt — even though the deal required the miner to sell nearly 50% of its equipment.

Furthermore, a publicly listed Bitcoin mining company, Core Scientific, reportedly filed for Chapter 11 bankruptcy on December 21. While the company continues to generate positive cash flows, the income is insufficient to cover operating costs, which include paying off the lease for its bitcoin mining equipment.

During these events, Bitcoin held $16,800, so there are buyers at these levels. But let’s take a look at the crypto derivatives data to understand whether investors have increased their appetite for risk on Bitcoin.

Bitcoin futures are back
Fixed month futures contracts usually trade at a slight premium to regular spot markets because sellers require more funds to withhold settlement for a longer period. Technically known as contango, this mode is not limited to crypto assets.

In healthy markets, futures contracts should trade at an annual premium of 4% to 8%, which is enough to offset the risk as well as the cost of capital.

Bitcoin futures annual premium for two months. Source: Laevitas
It becomes clear that attempts to push the index above zero have completely failed over the past 30 days. The lack of a future premium for Bitcoin indicates high demand for bears, and the scale worsened from December 14th to December 21st.

The current discount of 1.5% indicates the reluctance of professional traders to add long (bullish) leveraged positions despite being paid for doing so.

Big traders are not willing to give up their long positions
However, investors should analyze the long-to-short ratio to exclude external factors that only affected the quarterly contract premium.

The metric collects data from clients’ positions traded in spot and perpetual contracts, better illustrating how professional traders position themselves.

Major exchange traders is long to short ratio of Bitcoin. Source: Coinglass
Although Bitcoin briefly traded below $16,300 on December 19, professional traders did not reduce their long leveraged positions according to the long-to-short indicator. For example, the Huobi Traders Ratio was stable at 1.01 between December 16th and December 21st.

Similarly, OKX displayed a modest increase in the long-to-short ratio, with the index moving from the current 1.02 to the current 1.04 in five days.

Finally, the scale moved slightly from 1.05 to 1.07 on Binance, confirming that traders are not bearish after testing the support of the ascending channel.

The support strength at $16,800 is a bullish sign
Traders cannot be sure that the lack of a future premium necessarily translates into bearish price expectations. For example, a lack of trust in the exchanges could have turned potential buyers off leverage.

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Moreover, the elasticity of the long-to-short ratio of large traders has shown that whales and market makers have not reduced their long leverage despite the recent price decline.

In essence, Bitcoin price action has been surprisingly positive, considering the influx of negative news from miners and the bearish impact of rate hikes on risk markets.

Therefore, as long as the channel support at $16,500 continues to hold, the bulls have reason to believe that another shot at the upper end of the $18,400 range is viable before the end of the year.