Bitcoin Bears Beware! BTC Has $17K As Support As S&P 500 Falls 1.5%
Bitcoin (BTC) bulls regained some control on November 30 and they succeeded in keeping the BTC price above $16,800 for the last 5 days. While the level is lower than traders’ desired $19,000 to $20,000 target, the 8.6% gain since November 21, $15,500 provides enough cushion for any downside price surprises.
One of these cases is that the US stock market fell 1.5% on December 5 after a stronger than expected November ISM Services reading raised concerns that the US Federal Reserve (FED) will continue to raise interest rates. At the meeting in September, FED chairman Jerome Powell indicated that the point of keeping interest rates flat “has to be somewhat higher.”
At the moment, macroeconomic headwinds remain unfavorable and are likely to remain so until investors have a clearer picture of the labor market and the currency strength of the US dollar (DXY) index.
Too high levels lower the income of exporters and companies that depend on income outside the United States. A weak dollar also indicates a lack of confidence in the US Treasury’s capacity to manage its $31.4 trillion debt.
The impact of the 2022 bear market continues to make waves as the Bybit exchange decided to roll out a second round of layoffs on December 4. Ben Zhou, co-founder and CEO of Bybit, announced a sharp 30% reduction in the company’s workforce. The company had previously grown to over 2,000 employees in two years.
Let’s look at derivatives calculations to better understand how professional traders are positioned in the current market conditions.
Asia-based stablecoin demand falls after 4% peak
The USD Coin (USDC) premium is a good measure of China-based crypto traders’ demand. It measures the difference between China-based peer-to-peer trades and the US dollar.
Excessive buying demand tends to push the indicator above fair value of 100%, and during bearish markets, the stablecoin’s market supply is flooded, causing a discount of 4% or higher.
Currently, the USDC premium is 100.5%, down from 103.5% on November 28, so despite the failed attempts to break above the $17,500 resistance, there was no panic selling by Asian retail investors.
However, this data should not be considered bullish because the recent USDC buying pressure up to a 4% premium indicates that traders took shelter in stablecoins.
Leverage buyers ignored the recent pump to $17,400
The long-to-short calculation excludes externalities that may have solely affected the Stablecoin market. It also collects data from exchange clients’ positions on spot, perpetual and quarterly futures contracts, thereby providing better information on how professional traders are positioned.
There are occasional methodological discrepancies between different exchanges, so readers should monitor changes rather than absolute numbers.
Although Bitcoin gained 5.5% in seven days, professional traders have kept their long positions unchanged according to the long-to-short indicator.
The ratio for Binance traders improved from 1.05 on November 28 to today’s 1.09 level. Meanwhile, Huobi showed a modest decline in its long-to-short ratio, with the indicator moving from 1.07 to 1.03 in the seven days to December 5.
On the OKX exchange, the metric increased from 0.98 on November 28 to today’s 1.01 ratio. So, on average, traders have maintained their leverage ratio during the week, which is disappointing data considering the price gains.
Related: USDC issuer Circle closes SPAC merger with Concord
Support at $16.8 is gaining strength, but derivatives are showing mild buying demand
These two derivative metrics – the stablecoin premium and the top traders’ long-to-short value – suggest that leverage buyers did not support the Bitcoin price rally to $17,400 on December 5.
A more bullish sentiment would have moved the Asian stablecoin premium above 3% and the long-to-short ratio higher compared to last week. The current data from these two markets reduces the odds of a sustainable rally above $17,400. Still, a 3.5% decline against the $16,500 support should not cause concern as both metrics showed no signs of bearish bets forming.
In short, the bearish sentiment prevails, but the bears are getting less confident even as the Bitcoin price trades flat and the S&P 500 index fell 1.5%.
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
