The Bitcoin (BTC) worth chart from the previous couple of months displays nothing greater than a bearish outlook and it’s no secret that the cryptocurrency has persistently made decrease lows since breaching $48,000 in late March.
Curiously, the distinction in help ranges has been getting wider because the correction continues to empty investor confidence and danger urge for food. For instance, the most recent $19,000 baseline is sort of $10,000 away from the earlier help. So if the identical motion is sure to occur, the following logical worth degree could be $8,000.
Merchants are afraid of regulation and contagion
On July 11, the Monetary Stability Board (FSB), a world monetary regulator together with all G20 international locations, introduced {that a} framework of recommendations for the crypto sector is expected in October. The FSB added that international regulators need to supervise crypto markets in line with the principle of “same activity, same risk, same regulation.”
In a written speech on July 12, Jon Cunliffe, deputy governor for financial stability at the Bank of England, said that crypto is somehow over and it should not be a concern anymore. Cunliffe added: “innovation has to happen within a framework in which risks are managed.”
To date, investors still haven’t figured out the total losses from deposits on crypto lenders Celsius and Voyager Digital, and both firms continue to seek either a recovery plan or bankruptcy. According to Voyager, the firm still holds $650 million worth of “claims against Three Arrows Capital,” so the exact numbers of customer assets remain unknown.
The negative newsflow is reflected in the CME’s Bitcoin futures contracts premium. This data measures the difference between longer-term futures contracts and the current spot prices in regular markets.
Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is also known as backwardation and indicates that bearish sentiment is present.
These fixed-month contracts usually trade at a slight premium, indicating that sellers are requesting more money to withhold settlement for longer. As a result, futures should trade at a 0.25%–0.75% premium in healthy markets, a situation known as contango.
Notice how the indicator has stood below the “neutral” range since early April, since Bitcoin failed to sustain levels above $45,000. The data shows that institutional traders are unwilling to open leverage long positions, although it is not yet a bearish structure.
Macroeconomic fears are preventing investors from trading crypto
Exchange-provided data highlights traders’ long-to-short net positioning. By analyzing every client’s position on the spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.
There are occasional discrepancies in the methodologies between different exchanges, so viewers should monitor changes instead of absolute figures.
Despite Bitcoin’s 11% correction from July 9 to 12, top traders have increased their leverage longs. The long-to-short ratio at Binance remained relatively flat at 1.13, while the top traders at Huobi started at 0.95 and finished the period at 0.93. However, this impact was more than compensated by OKX traders increasing their bullish bets from 1.09 to 1.32.
Related: The search term ‘Bitcoin Crash’ is trending — Here’s why
The lack of a premium in the CME futures contract is not concerning because Bitcoin is struggling with the $20,000 resistance. Furthermore, top traders on derivatives exchanges have increased their longs despite the 11% price drop in three days.
Regulatory pressure is unlikely to recede in the short term and at the same time, there’s not much that the Federal Reserve can do to suppress inflation without triggering some form of an economic crisis. For this reason, pro traders are not rushing to buy the dip because Bitcoin’s correlation to traditional assets remains high.
The views and opinions expressed here are solely those of the author and don’t essentially replicate the views of Cointelegraph. Each funding and buying and selling transfer includes danger. You must conduct your personal analysis when making a call.
