When Bitcoin (BTC) tested the $ 43,000 support for the third day in a row, whales bought the slump on the futures exchanges. While there was no significant change in price, the Bitcoin futures premium hit its lowest level in six months. This indicator corresponds to December 11, 2020 when Bitcoin hit a low of $ 17,600 just 10 days after an all-time high of $ 19,915.
In December 2020, the derivatives action triggered a 95% rally within 23 days, taking Bitcoin to a new high of $ 42,000. In addition to the futures premium bottoming out, rumors of potentially harmful regulations in the US played a central role in the market downturn in both cases.
Regulatory uncertainties are once again the focus
This time US Treasury Secretary Janet Yellen stated at the Washington Square Journal CEO Summit on May 4th:
“There are issues related to money laundering, banking secrecy law, using digital currency for illegal payments, consumer protection and the like.”
On May 6, the chairman of the US Securities and Exchange Commission, Gary Gensler, presented the idea to Congress to monitor the crypto room more closely. Gensler said:
“Right now there is no market regulator for these crypto exchanges, so there really is no protection against fraud or manipulation.”
In addition to the regulatory haze, the US Securities and Exchange Commission issued an investor warning on May 11, highlighting the risks of mutual funds that are exposed to bitcoin futures.
When Bitcoin hit an all-time high of $ 19,915 on December 1 and the futures premium rose over 15%, the premium responded to the price correction. While the 8% low seems close to the previous month’s average, it is very modest considering that Bitcoin is up 90% in two months.
Note that once the $ 17,600 level was proven, the futures premium rose to 15%, indicating optimism.
The current situation started differently as the market was overly optimistic from the start. However, the situation has changed drastically in the past week as Bitcoin has dropped 26%. This move resulted in the futures premium at 8%, its lowest level in six months.
Whales aggressively bought under $ 43,000
However, the bearish sentiment lasted for a very short time on May 17th when the whales finally decided it was time to buy the dip.
The top traders long-to-short indicator is calculated using clients’ consolidated positions, including margin, perpetual and futures contracts. This metric provides a broader view of professional traders’ effective net position by collecting data from multiple markets.
OKEx’s top traders moved from a long-short ratio of 1.62 on May 16 to a high of 2.74 when Bitcoin tested the $ 43,000 support in the early hours of May 17. This data shows that whales and market makers had long positions almost three times the size of shorts, which is very unusual.
While her bullish bet stands, she signals a full pattern from the previous week. Business intelligence firm MicroStrategy raised another $ 10 million worth of Bitcoin at an average price of $ 43,663.
While it may be too early to explain the corrective phase has ended, there appears to be enough evidence of the bottoming out in futures premiums and the whales’ intense buying activity below $ 43,000.
If history repeats itself and a 95% rally ensues, Bitcoin could hit $ 83,000 in mid-June.
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