Bitcoin Traders Cross Fingers in Hopes Positive Fed Meeting Triggers a Run to $18K

Bitcoin (BTC) failed to break above the $17,250 resistance on December 11 and then faced a 2.2% correction. More importantly, the last daily close above this level was over 30 days ago – reinforcing the thesis of size sellers near the $330 billion market cap.

Curiously, this valuation level is slightly behind Palladium, the world’s 23rd most valuable traded asset with a capitalization of $342 billion. So on one hand, Bitcoin bulls have some reasons to celebrate as the price recovered 10% from a low of $15,500 on November 21st, but the bears still have the upper hand on a larger time frame as BTC is down 64% year-to-date. .

Two events are expected to decide the fate of traditional financial investors, as the US consumer price index is expected in December. 13 and the US central bank chairman Jerome Powell will announce the size of the next interest rate increase on 14 December. Powell’s press conference will also be eagerly awaited by investors.

In the cryptocurrency markets, there is mild relief stemming from the exchange’s evidence of reserves, although several analysts have criticized the limited details in each report.

Derivatbørs Bybit was the latest addition to the transparency initiative, which allows users to self-verify their deposits using Merkle Trees, according to a Dec. 12 announcement.

However, regulatory risks remain high after US Democratic Senator and crypto-skeptic Jon Tester boldly stated that he sees “no reason why” crypto should exist. During an appearance on NBC on December 11, Tester argued that crypto has no real value, so regulating the sector would give it legitimacy.

Finally, according to Reuters, the US Department of Justice (DOJ) is nearing completion of its investigation into Binanceexchange, which began in 2018. The December 12 report suggests a conflict among prosecutors over whether the evidence is enough to pursue criminal charges.

Let’s look at derivatives calculations to better understand how professional traders are positioned in the current market conditions.

The Asia-based stablecoin premium falls to a 2-month low

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 99%, down from 102.5% on December 3, indicating less demand for stablecoin purchases from Asian investors. The data gains relevance after the many failed attempts to break above the $17,250 resistance.

However, this data should not necessarily be bearish because the stablecoin position could have been converted to fiat (paid out) solely due to counterparty risk – meaning investors withdrew from exchanges.

Leverage buyers ignored the failed resistance break

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 failed to break the $17,250 resistance, professional traders have kept their long positions unchanged according to the long-to-short indicator.

For example, the ratio for Binance traders fell slightly from 1.08 on December 5th to today’s 1.05 level. Meanwhile, Huobi showed a modest decline in its long-to-short ratio, with the indicator moving from 1.04 to 1.02 in the seven days to December 12.

Nevertheless, on the OKX exchange, the metric increased from 1.04 on December 5 to today’s 1.07 ratio. So, on average, traders have maintained their leverage ratio during the week, which is encouraging data considering the weak price action.

Bitcoin’s $17,250 resistance is losing strength

There is an old saying: “if a support or resistance continues to be tested, it is likely to weaken.” For now, the stablecoin premium and top traders’ long-to-short term suggests leverage buyers are not supportive despite the multiple failures to break above $17,250 in December.

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Although the Asian stablecoin premium is no longer present, the 1% discount is not enough to signal discomfort or distressed sellers. Furthermore, the top traders’ long-to-short ratio was flat compared to last week.

The data from these two markets supports the thesis that Bitcoin breaks above $17,250 as long as the US FED meeting on December 14 signals that interest rate hikes are coming to an end. If this were the case, investors’ bearish sentiment could be extinguished as bears will become less confident, especially if the Bitcoin price holds the $17,000 level.