Bitcoin bulls fail to hold $21K, but pro-traders refuse to turn bearish

147 days have passed since Bitcoin (BTC) closed above $25,000, and the result is that investors are less confident that the $20,000 support will hold. Supporting these concerns are persistent global financial and macroeconomic tensions, which escalated on November 7 after EU officials expressed concern over the US$369 billion inflation reduction bill.

The expanded tax, health and climate bill was approved in August and also includes subsidies for electric cars and battery supply chains that are made in North America.

According to CNBC, this is not the first time Europe has expressed its concerns, citing international trade rules and “discriminatory” policies.

Further uncertainty comes from the US mid-term elections on November 8, which will determine which party controls Congress. Currently, the Democrats hold the majority in the lower house, but a change in this status could facilitate President Biden’s future spending plans.

In other news, Apple announced a temporary reduction in iPhone 14 production due to Covid-19 restrictions in China. To put things in perspective, Apple’s market capitalization of $2.2 trillion has surpassed the sum of Alphabet (Google) and Amazon.

Let’s look at Bitcoin derivatives data to understand if the worsening global macroeconomic conditions have affected crypto investors.

Pro-traders were not thrilled with the rally above $21,000

Retail traders usually avoid quarterly futures because of their price difference from the spot markets. Nevertheless, they are professional traders’ instruments of choice because they prevent the fluctuations in funding rates that often occur in a perpetual futures contract.

Three-month futures annualized premium should trade at +4% to +8% in healthy markets to cover costs and associated risk. The chart above shows that derivatives traders have been neutral to bearish over the past week, as the Bitcoin futures premium remained below 2.5% throughout.

More importantly, the metric did not improve after BTC rallied 7% between November 3 and November 5 to test the $21,500 resistance. This price level was the highest since September 13, so the data reflects professional traders’ reluctance to add leveraged long (bull) positions.

Related: Crypto no longer in top 10 most cited potential risks: US central bank report

Margin markets show bulls’ resilience

Traders should also analyze the margin trading markets to understand how professional traders are positioned. Margin trading allows investors to borrow cryptocurrency to leverage their trading position. For example, one can increase exposure by borrowing stablecoins to buy an additional Bitcoin position.

On the other hand, Bitcoin borrowers can only short the cryptocurrency because they are betting that the price will go down. However, unlike futures contracts, the balance between margin longs and shorts is not always matched.

Data shows that OKX traders’ margin lending ratio has remained relatively stable at 8 over the past week. On the one hand, the indicator is somewhat worrying, giving the rally from $20,050 to $21,475 on November 5, which should have positively affected the margin lending ratio. The current 8.1 level provides enough room for sustainable buying pressure when the time comes.

The metric remains bullish by favoring stablecoin loans with a wide margin. In a nutshell, pro-traders have been holding bullish positions using stablecoin margin loans.

Futures and margin calculations suggest that Bitcoin’s failure to hold the $21,000 support was insufficient to cause panic among professional traders. The data also shows a modest degree of apathy because the recent 7% rally towards $21,500 was not accompanied by higher demand for leveraged longs.

Bears continue to exert their strength even as the elusive $25,000 daily industry becomes even more distant. Until macroeconomic conditions and political uncertainty dominate the headlines, bulls are less likely to have high hopes for a more sustainable rally.