Bitcoin’s Most Likely Path Back to $16,000 According to 2 Derivatives Indicators

Bitcoin (BTC) on December 16 fell below $16,800, hitting its lowest level in more than two weeks. More importantly, the move completely removed the momentary excitement that led to the December 14th. a peak of $18,370 was reached.

Interestingly, Bitcoin is down 3.8% in seven days, compared to the S&P 500’s 3.5% drop over the same period. So, on the one hand, Bitcoin bulls feel comfortable knowing that correlation played a key role; However, at the same time, she signed a 206 million USD BTC futures settled down on December 15.

Some troubling economic data auto loan industry has raised concerns among investors as the default rate for lower-income consumers is now above 2019 levels. The concern comes after the average monthly payment for a new car reached $718, a 26 percent increase in three years.

In addition, central banks in the United States, England, the European Union and Switzerland raised interest rates by 50 basis points to multi-year highs, underscoring that borrowing costs are likely to rise longer than the market expected.

Uncertainty in cryptocurrency markets has returned after two of the the most prominent auditors will suddenly leave their service, leaving the exchanges hanging. French auditing firm Mazars Group, which previously worked with exchanges such as Binance, KuCoin and, has removed a dedicated cryptocurrency auditing section from its website.

Meanwhile, accounting firm Armanino is also announcing that it has discontinued its cryptocurrency auditing services. The auditor has worked with various cryptocurrency trading platforms such as OKX, and the troubled FTX exchange. Interestingly, Armanino was the first accounting firm to make connections in the cryptocurrency industry, back in 2014.

Bitcoin, against the dangerous cocktail: its volatility and transaction volume are falling

Let’s take a look at derivatives metrics to better understand how professional traders stack up in current market conditions.

Asian stablecoin premium falls to 2-month low

USD coin premium (USDC) is a good indicator of demand for retail cryptocurrency traders in China. It measures the difference between peer-to-peer transactions in China and the US dollar.

Excessive buying demand tends to push the meter above 100% of true value, and during bear markets, the stable coin market is flooded with supply, causing a discount of 4% or more.

USDC cross trade against the USD/CNY pair. Source: OKX

The USDC premium currently stands at 101.8%, compared to 99% on December 12th, indicating increased buying demand for stablecoins from Asian investors. The data comes after a brutal 9.7% correction in five days from a high of $18,370 on December 14.

However, this indicator should not necessarily be seen as bullish, as the stablecoin may have been purchased to hedge against the risk of the cryptocurrency falling, meaning investors are becoming more bearish.

Leveraged buyers are slowly throwing in the towel

The ratio of long to short positions excludes external factors that may have only affected the stablecoin market. It also collects data on each exchange’s clients’ positions in spot, futures and quarterly futures to better understand the position of professional traders.

There are sometimes methodological discrepancies between different exchanges, so readers should look for changes rather than absolute numbers.

Proportion of long and short Bitcoin positions by professional traders on each exchange. Source: Coinglass

As Bitcoin fell below the $16,800 support, professional traders trimmed their leveraged long positions on the indicator.

When is the best time to buy BTC? This analyst reveals his vision

For example, Binance’s trader indicator has fallen slightly from 1.11 on December 14th to the current level of 1.04. Huobi, meanwhile, showed a slight decrease in its long-to-short ratio, with the gauge rising from 1.01 to 0.05 over the same period.

Finally, the OKX metric dropped from 1.00 on December 14th. to a current ratio of 0.98. On average, traders have reduced their long leverage over the past five days, indicating less confidence in the market.

A $16,000 re-inspection is likely

USDC’s average premium of 101.8% in Asia, combined with data on the declining long/short ratio from professional traders, tells the story of buyers slowly giving in to pessimism.

In addition, 206 million The liquidation of USD long BTC futures shows that buyers continue to be overleveraged, creating a perfect storm for the next correction.

Currently, the price of Bitcoin is still heavily dependent on traditional stock markets. Still, weak macroeconomic data and uncertainty from crypto-audit firms suggest that bitcoin is more likely to retreat further to $16,000.

The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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