Bitcoin price has been facing a period of intense volatility since it fell from a high of $ 52,950 on September 7 to a low of $ 42,800 just two hours later. BTC continued to fall at the start of the new week as a lack of bullish momentum hit a new low near $ 44,000.
After closing the week below the major 50-day and 200-day moving averages, it seems increasingly less likely that the crypto king will recapture them anytime soon.
For the analyst Michaël van de Poppe, these two moving averages form a golden cross. However, there is “no guarantee” that the price will rise.
“I think we’re going to peak this cycle … next year, roughly April through May.”
Meanwhile, $ 44,000 and $ 47,000 are forming new levels of support and resistance to watch BTC price action.
For the retailer Rekt Capital, $ 44,000 is just as important and forms the lower limit of the “demand zone” among buyers.
“BTC’s recent weekly close is technically not bad as it happened over the orange demand zone. However, BTC is now going deeper into this area. However, the demand zone has not been lost. As long as it lasts, BTC won’t slide down to $ 40,000. “
Source: Rekt Capital / Twitter
What is the bitcoin derivatives market saying?
There is no doubt that short positions – traders betting on the downside – have prevailed since the $ 3.54 billion long Bitcoin futures position liquidated on Sept. 7.
Yesterday, Bitcoin magazine reported that MicroStrategy bought more than 5,050 bitcoins at an average price of $ 48,099, but that news wasn’t enough to restore confidence and the BTC price is still hovering at $ 45,000.
While the market is not yet feeling the effects of the short position, regulatory concerns weigh on the markets as the US Treasury Department discussed possible regulation for private stablecoins, Cointelegraph reported. Reuters report of September 10th.
Regulators’ particular interest in the stablecoin has increased as its valuation climbs from $ 37 billion in January to $ 125 billion today. In addition, both Visa and Mastercard expressed their interest in solutions related to stablecoin.
Regardless of the reasons for the current price weakness, derivative contracts have been showing bullish sentiment since August.
Professional traders have been bullish for the past five weeks
Quarterly Bitcoin futures contracts are the preferred instrument for whales and arbitrageurs as they have the significant advantage of less volatile funding rates. However, these can seem complicated to retailers due to their billing dates and price differences compared to the spot market.
When traders opt for open-ended contracts (reverse swaps), the derivatives exchanges charge a fee every eight hours, depending on which side is using more leverage. Meanwhile, contracts that expire on a fixed date are usually traded at a premium from regular spot exchanges to make up for late payments.
In healthy markets, the annual premiums are usually between 5 and 15% as the money trapped in these policies can be used for loans. This situation is known as contango and occurs with almost every derivative.
However, this indicator gradually decreases or goes negative during bear markets, causing backwardation.
The graph above shows that the premium (base rate) rose over 8% on August 7th and has maintained this moderately bullish trend since then. As a result, the data is exceptionally healthy and shows little indecision, even though Bitcoin has tested below $ 44,000 twice in the past 15 days.
OI is still good
The liquidation of 3.54 billion
The current $ 14.8 billion figure is 23% above the June and July average of $ 12 billion, contradicting speculation that Bitcoin’s volatility or fears of an imminent bearish event have hit traders badly and badly were reluctant to take up a position.
There is no doubt, at least according to the futures market, that investors are neutral on the upside despite the recent price correction. Of course, traders should keep an eye on key resistance levels, but $ 44,000 has held up so far.
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