The Bitcoin (BTC) price chart over the past few months reflects nothing but a bearish outlook. The coin has been hitting lows consistently since breaking below $48,000 at the end of March. So what do the fundamental and technical situations show?
Traders consider these factors for Bitcoin
Curiously, the gap in support levels grows wider as the correction continues to lower investor confidence and risk appetite. For example, the most recent baseline of $19,000 is almost $10,000 off the previous support. So, according to analyst Marcel Pechman, if the same move is bound to happen, the next sensible price level would be $8,000. As we reported as Kriptokoin.com, on July 11, the Financial Stability Board (FSB), a global financial regulator that includes all G20 countries, announced that a framework of recommendations for the crypto industry is expected in October.
The FSB added that international regulators should monitor crypto markets in line with the “same activity, same risk, same regulation” principle. In a written speech on July 12, Jon Cunliffe, the Bank of England vice-president for financial stability, said that somehow crypto is gone and should no longer be a concern. To date, investors have still not been able to settle the total loss from deposits on Celsius and Voyager Digital. Both firms continue to seek a bailout or bankruptcy.
The negative news feed is reflected in CME’s premium on Bitcoin futures contracts. This data measures the difference between long-term contracts and current spot prices in normal markets. When this indicator disappears or turns negative, it is an alarming red flag. This condition is also known as retrograde and indicates that a bearish trend is present. These fixed monthly contracts are usually traded at a slight premium. This indicates that sellers are demanding more money to delay settlement longer. As a result, futures should trade at a premium of 0.25-0.75 percent in healthy markets, a condition known as contango.
Macroeconomic conditions affect BTC investors
It is remarkable how the indicator has remained below the “neutral” range since the beginning of April, as Bitcoin failed to sustain levels above $45,000. The data shows that institutional investors are reluctant to open long-term leveraged positions, even if they are not yet bearish. The data provided by the exchange highlights the net positions of investors from long to short. By analyzing each trader’s position in contracts, it can be better understood whether professional traders tend to be bullish or bearish.
Despite Bitcoin’s 11 percent correction from July 9 to 12, traders increased their long positions. On Binance, the long-to-short ratio remained relatively stable at 1.13, while traders on Huobi started at 0.95. He finished the period in 0.93. However, this effect was more than offset by OKX traders increasing their bullish bets from 1.09 to 1.32.
Bitcoin is highly correlated with traditional assets
The lack of premium on the CME futures contract is not related to Bitcoin battling the $20,000 resistance, according to the analyst. Also, top traders on derivatives exchanges increased their long positions despite the 11 percent price drop in three days. Regulatory pressure is unlikely to recede in the short term. At the same time, there isn’t much the Fed can do to suppress inflation without triggering some sort of economic crisis. Therefore, professional traders are in no rush to buy the dip as Bitcoin’s correlation with traditional assets remains high.
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