The Fed stopped rate increases, Binance, and U.S. stock markets reached year-to-date highs. Despite the US and SEC coming to a deal, research indicates that Bitcoin bulls are still somewhat wary.
On June 15, Bitcoin rose 6.5% as bulls successfully held the $26,300 level after a brief retest of the $25,000 support. The cryptocurrency has decreased by 12.7% in the last two months, despite this, and the general attitude is still slightly gloomy.
A small part of the reason why Judge Amy Berman Jackson of the United States district court dismissed Binance.US’s temporary restraining order is because investor mood has improved. According to reports, the exchange and the U.S. came to an arrangement on June 16. The Securities and Exchange Commission (SEC) avoided having its assets frozen.
On a longer time scale, the global regulatory climate has been tremendously detrimental to cryptocurrency pricing. Aside from the SEC’s attempt to arbitrarily identify which cryptocurrencies as securities and its litigation with the two largest worldwide exchanges, the European Union signed the Markets in Crypto-Assets (MiCA) legislation into law on May 31. This implies that crypto firms have set deadlines for implementing and complying with MiCA’s regulations.
Surprisingly, despite Bitcoin’s poor performance, the S&P 500 Index achieved its highest level in 14 months on June 16. Despite this comeback, JPMorgan strategists predict that the rise will be tested in the second half of 2023 « if growth stalls in absolute terms. »
Investors will remain focused on the United States’ central bank, with Federal Reserve Chair Jay Powell scheduled to speak before the House Financial Services Committee on June 21 and the Senate Banking Committee on June 22 as part of his semi-annual hearing before Congress.
Let’s take a look at Bitcoin derivatives indicators to see how professional traders are faring in the face of bleak macroeconomic forecasts.
The demand for leveraged longs on Bitcoin margin and futures is modest.
Margin markets allow investors to borrow cryptocurrencies to leverage their holdings, which gives information on how professional traders are positioned.
A margin-lending indication based on the stablecoin/BTC ratio is offered by OKX, for example. Borrowing stablecoins to purchase Bitcoin allows traders to enhance their exposure. However, Bitcoin borrowers may only wager on a cryptocurrency’s price falling.
The margin-lending ratio of OKX traders has been dropping since June 10 according to the above data, which suggests that the longs’ hegemonic supremacy has ended. Despite being near its lowest points in five weeks, the current stablecoin lending 23:1 ratio still favours bulls.
The long-to-short ratio for Bitcoin futures should also be examined by investors as it does not account for external factors that may have affected the margin markets alone.
Readers should track changes rather than absolute numbers since there are occasionally methodological inconsistencies across exchanges.
Top OKX traders significantly reduced their short positions on June 15 as the price of bitcoin fell below $24,800, its lowest level in three months. The ratio has subsequently changed back to 0.80, in accordance with the two-week average, since those traders were uneasy maintaining a ratio that favoured longs.
The reverse action occurred at Binance, where top traders cut their long-to-short ratio to 1.18 on June 15 but later increased longs, and the indicator is now at 1.25. The long-to-short ratio for Binance’s top traders is now in line with the previous two-week average, notwithstanding an improvement.
Despite robustness in derivative indicators, Bitcoin’s price increases remain limited
In general, Bitcoin bulls lack the confidence to leverage long positions utilizing margin and futures markets. BTC lacks momentum since investors’ focus has switched to the stock market as a result of the Fed’s decision to stop raising interest rates, which has improved the outlook for corporate earnings.
According to measures for Bitcoin futures, professional traders did not go pessimistic despite the tremendously unfavourable regulatory environment. The 20-day resistance at $27,500 is strengthening, though, giving the advantage to bears as it reduces the short-term upside to only 3.8%.
