Crypto Regulations Are Coming, But Bitcoin Traders Still Buying Down

Examining the Bitcoin chart from a weekly or daily perspective presents a bearish outlook and it is clear that ( BTC ) the price has stea...


Examining the Bitcoin chart from a weekly or daily perspective presents a bearish outlook and it is clear that (BTC) the price has steadily declined since reaching an all-time high of $ 69,000.

Bitcoin / USD on FTX. Source: TradingView

Oddly enough, the November 10 price spike came just as the United States announced inflation had hit an all-time high. Highest for 30 years, but the mood quickly turned after fears over China-based real estate developer Evergrande in default on its loans. This appears to have had an impact on the broader structure of the market.

Traders are still afraid of stablecoin regulation

This initial corrective phase was quickly followed by relentless pressure from regulators and policy makers on stablecoin issuers. First came the VanEck spot Bitcoin ETF rejection by the United States Securities and Exchange Commission on November 12. The denial was directly linked to the view that Tether’s stablecoin (USDT) was not creditworthy and concerns about Bitcoin’s price manipulation.

On December 14, the United States Committee on Banking, Housing and Urban Affairs held a audience on stablecoins focused on consumer protection and their risks and on December 17, the US Financial Stability Supervisory Board (FSOC) expressed its concern about stablecoin adoption and other digital assets. “The Council recommends that state and federal regulators review the regulations and available tools that could be applied to digital assets,” the report said.

The deterioration in investor mood was reflected in the CME’s Bitcoin futures premium. The metric measures the difference between long-term futures contracts and the current spot price in regular markets.

Anytime this indicator fades or turns negative, it is an alarming red flag. This situation is also known as a shift and indicates that a bearish sentiment is present.

2 month Bitcoin CME futures contract premium over Coinbase / USD. Source: TradingView

These fixed month contracts usually trade at a small premium, indicating that sellers are asking for more money to hold settlement longer. Futures contracts are expected to trade at an annualized premium of 0.5% to 2% in healthy markets, a situation known as contango.

Notice how the indicator fell below the “neutral” range after December 9 as Bitcoin traded below $ 49,000. This shows that institutional traders are showing a lack of confidence, although it is not yet a bearish structure.

The best traders increase their bullish bets

The data provided by the stock market highlights the net long-to-short positioning of traders. By analyzing each client’s position on the spot, perpetual and futures contracts, one can better understand whether professional traders are bullish or bearish.

Sometimes there are discrepancies in methodologies between different exchanges, so viewers should watch for changes rather than absolute numbers.

Trade the best Bitcoin long-to-short ratio traders. Source: Coinglass.com

Despite Bitcoin’s 19% correction since December 3, top traders at Binance, Huobi, and OKEx have increased their leverage. To be more precise, Binance was the only exchange facing a modest reduction in the long / short ratio of top traders. The figure fell from 1.09 to 1.03. However, this impact was more than offset by OKEx traders increasing their bullish bets from 1.51 to 2.91 in two weeks.

Related: SEC commissioner Elad Roisman to leave by end of January

The lack of a premium in 2-month CME futures should not be viewed as a “red alert” as Bitcoin is currently testing the resistance of $ 46,000, its lowest daily close since October 1. In addition, the best traders on derivatives exchanges increased their long positions. despite the drop in prices.

Regulatory pressure is unlikely to intensify in the near term, but at the same time, there is little the US government can do to suppress stablecoin issuance and transactions. These businesses can relocate outside of the United States and operate using dollar-denominated bonds and assets instead of cash. For this reason, currently there is hardly any sense of panic in the market and according to the data professional traders are buying the downside.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.