Bitcoin (BTC) rose 20% in seven days in an unexpected move that brought the price to its highest level since May 18, currently under scrutiny in the U.S. Senate.
Although Bitcoin price continues to rise, investors fear regulation could wipe out recent gains, but derivative indicators are showing no sign of the bears’ confidence.
The proposal requires that transactions in digital assets worth more than $ 10,000 be reported to the Internal Revenue Service, including validators, miners, and protocol developers. However, Senator Cynthia Lummis and Senator Pat Toomey advocate focusing these requirements solely on brokers and the exchanges.
The owners continue to “hold on” and inflation benefits the crypto market
On-chain analytics firm Glassnode highlighted that coins held for 12 months or more will not move despite the strong rally, indicating “hold” behavior. Meanwhile, the Crypto Fear and Greed Index, a well-known indicator that tracks volatility, volume, social media, dominance and Google searches, has shifted from “moderate” to “greed”.
The 74-point indicator hit on August 8th was its highest level since April 18th, suggesting that investors firmly believe that the bottom of this cycle is behind us. The index ranges from 0 (extreme fear) to 100 for maximum greed.
It’s worth noting that the United States Bureau of Labor Statistics will release its July inflation report on Wednesday, with markets forecasting a 0.5% increase. The cryptocurrency markets also reacted positively after Fed chairman Jerome Powell failed to explain how the consumer price index (CPI) surge would decline 5.4% year over year.
Margin and futures markets show little bear activity
Analysis of derivative indicators can help confirm whether these positive expectations are reflected in professional trader’s data. The first is the Bitfinex margin to long ratio, which changes drastically when bearish bets are made.
The graph above shows that the Bitfinex margin longs were back at 90% or higher after a brief period from July 9th to July 19th. However, the ratio has not deteriorated since then, indicating a lack of confidence on the part of the bears.
Bitfinex margin traders are known for creating positions of 20,000 or more BTC contracts in no time, indicating the involvement of whales and large arbitrage desks.
Next, analysts should evaluate the futures market by measuring the percentage of top clients who bet on either the upside (longs) or the downside (shorts). Remember that the outstanding amount in long and short contracts in the futures markets is always balanced.
Bybt consolidates futures market data from Binance, OKEx and Huobi top traders. The current 1.14 indicator favors long positions of 14% among the largest users of this exchange. As a result, there has been a significant change in the past 12 hours as these traders were previously net short.
Both the Bitfinex margin and futures markets of the futures exchanges indicate a lack of confidence from the bears as Bitcoin breaks the $ 45,000 resistance. This suggests that the recent 20% rally is well founded and not simply a slip or the result of severe liquidations.
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