Remarkably, this level of valuation is slightly behind palladium, which ranks 23rd in the list of the most traded assets in the world with a capitalization of $342 billion. So for one thing, the Bitcoin bulls have some reason to celebrate because the price has recovered 10% from the $15,500 low on November 21, but the bears still have the upper hand on a larger time frame given BTC is down 64% year-to-date. . .
Two events are expected to determine the fate of traditional finance investors, as the US Consumer Price Index is expected to be released on December 13th, and US Federal Reserve Chairman Jerome Powell will announce the size of the next interest rate hike on December 14th. Powell’s press conference investors will also be eagerly awaiting.
In cryptocurrency markets, there is slight relief from exchanges proving reserves, although many analysts criticized the limited detail of each report.
Derivatives exchange Bybit was the latest addition to the transparency initiative, allowing users to self-verify their deposits using Merkle Trees, according to a Dec. 12 announcement.
However, regulatory stakes remain high after US Democratic Senator and crypto-skeptic John Tester boldly stated that he sees no “why” for cryptocurrencies to exist. During his Dec. 11 appearance on NBC, Tester said that cryptocurrency has no real value, so regulating the sector would give him legitimacy.
Finally, according to Reuters, the US Department of Justice (DOJ) is nearing completion of its investigation into the Binance exchange, which began in 2018. The December 12 report notes that there is inconsistency among prosecutors as to whether the evidence is sufficient to pursue criminal charges.
Let’s take a look at derivative metrics to better understand how professional traders fare in the current market conditions.
The stablecoin premium in Asia drops to a two-month low
The premium is a good measure of cryptocurrency retailer demand in China. It measures the difference between peer-to-peer trades based in China and the United States dollar.
Excessive buying demand tends to pressure the index above the fair value at 100% and during bear markets it overwhelms the supply of the stablecoin market, causing a discount of 4% or higher.
USDC is peer-to-peer against USD/CNY. Source: OKX
Currently, the USD premium stands at 99%, down from 102.5% on December 3, indicating lower demand for stablecoin buying from Asian investors. The data is gaining importance after the multiple failed attempts to break above the $17,250 resistance.
However, this data need not necessarily be bearish because a stablecoin position could have been converted into fiat (cashed out) only due to counterparty risk – meaning investors withdrawing from the exchanges.
Leverage buyers ignored the failed resistance break
The long to short scale excludes external factors that may only affect the stablecoin market. It also collects data from clients’ positions traded in spot, perpetual and quarterly futures contracts, thus providing better information on how professional traders are positioned.
There are occasional methodological inconsistencies between different exchanges, so readers should keep an eye on changes rather than absolute numbers.
Major exchange traders is long to short ratio of Bitcoin. Source: Coinglass
Even though Bitcoin failed to break the $17,250 resistance, professional traders kept their long leveraged positions unchanged according to the long to short indicator.
For example, the Binance trader ratio decreased slightly from 1.08 on December 5 to the current level of 1.05. Meanwhile, Huobi showed a slight decrease in the buy-to-sell ratio, with the index moving from 1.04 to 1.02 in the seven days through December 12.
However, on the OKX exchange, the scale increased from 1.04 on December 5 to the current ratio of 1.07. So, on average, traders have maintained their leverage ratio for the week which is encouraging data given the lackluster price action.
Bitcoin resistance at $17,250 is losing ground
There is a saying: “If support or resistance continues to be tested, it will probably get weaker.” Currently, the stablecoin premium and major long-to-short-term traders are suggesting leveraged buyers are not supportive despite multiple failures to clear above $17,250 in December.
Related: NYC Mayor Stands By Bitcoin Pledge Amid Bear Market, FTX – Report
Even though the Asian stablecoin premium is no longer there, a 1% discount is not enough to indicate discomfort or distressed sellers. Moreover, the buying-to-sell ratio of the major traders remained flat against the previous week.
Data from these two markets supports the hypothesis of Bitcoin breaking above $17,250 as long as the US Federal Reserve meeting on December 14 indicates that interest rate hikes are coming to an end. If this is the case, the bearish investor sentiment could be extinguished as the bears will become less confident, especially if bitcoin price holds the $17,000 level.