Cointime

Download App
iOS & Android

Bitcoin traders’ bullish bias holds firm even as BTC price dips to $37K

Bitcoin briefly reached $38,000 on Nov. 24 but faced formidable resistance at the price level. On Nov. 27, Bitcoin price traded below $37,000, which is unchanged from a week ago. 

What is eye-catching is the unwavering strength of BTC derivatives, which signals that bulls remain steadfast in their intentions.

An intriguing development is unfolding in China as Tether trades below its fair value in the local currency, the yuan. This discrepancy often arises due to differing expectations between professional traders engaged in derivatives and retail clients involved in the spot market.

How have regulations impacted Bitcoin derivatives?

To gauge the exposure of whales and arbitrage desks using Bitcoin derivatives, one must assess BTC options volume. By examining the put (sell) and call (buy) options, we can estimate the prevailing bullish or bearish sentiment.

Deribit BTC options put-to-call volume ratio. Source: Laevitas

Since Nov. 22, put options have consistently lagged behind call options in volume, by an average of 40%. This suggests a diminished demand for protective measures — a surprising development given the intensified regulatory scrutiny following Binance’s plea deal with the United States Department of Justice (DOJ) and the U.S. Securities and Exchange Commission’s lawsuit against the Kraken exchange.

While investors may not foresee disruptions to Binance’s services, the likelihood of further regulatory actions against exchanges serving U.S. clients has surged. Additionally, individuals who previously relied on obscuring their activity might now think twice as the DOJ gains access to historical transactions.

Furthermore, it’s uncertain whether the arrangement former CEO Changpeng “CZ” Zhao struck with authorities will extend to other unregulated exchanges and payment gateways. In summary, the repercussions of recent regulatory actions remain uncertain, and the prevailing sentiment is pessimistic, with investors fearing additional constraints and potential actions targeting market makers and stablecoin issuers.

To determine if the Bitcoin options market is an anomaly, let’s examine BTC futures contracts, specifically the monthly ones — preferred by professional traders due to their fixed funding rate in neutral markets. Typically, these instruments trade at a 5% to 10% premium to account for the extended settlement period.

Bitcoin 30-day futures annualized premium. Source: Laevitas

Between Nov. 24 and 26, the BTC futures premium flirted with excessive optimism, hovering around 12%. However, by Nov. 27, it dipped to 9% as Bitcoin’s price tested the $37,000 support — a neutral level but close to the bullish threshold.

Retail traders are less optimistic after ETF hopium fades

Moving on to retail interest, there is a growing sense of apathy due to the absence of a short-term positive trigger, such as the potential approval of a spot Bitcoin exchange-traded fund (ETF). The SEC is not expected to make its final decision until January or February 2024.

The USDT premium relative to the yuan hit its lowest point in over four months on the OKX exchange. This premium serves as a gauge of demand among China-based retail crypto traders and measures the gap between peer-to-peer trades and the U.S. dollar.

USDT peer-to-peer vs. USD/CNY. Source: OKX

Since Nov. 20, USDT has been trading at a discount, suggesting either a significant desire to liquidate cryptocurrencies or heightened regulatory concerns. In either case, it’s far from a positive indicator. Furthermore, the last instance of a 1% positive premium occurred 30 days ago, indicating that retail traders aren’t particularly enthused about the recent rally toward $38,000.

In essence, professional traders remain unfazed by short-term corrections, regardless of the regulatory landscape. Contrary to doomsday predictions, Binance’s status remains unaffected, and the lower trading volume on unregulated exchanges may boost the chances of a spot Bitcoin ETF approval.

The disparity in time horizons may explain the divide between professional traders’ and retail investors’ optimism. Additionally, recent regulatory actions could pave the way for increased participation by institutional investors, offering a potential upside in the future.

Comments

All Comments

Recommended for you

  • Making the Internet Alive Again

    The Internet is changing. Are we changing, too?

  • On Compressionism

    How a technological necessity is becoming the face of a burgeoning realm of cryptoart

  • Ethereum: The Infinite Story Machine 💫

    Yesterday, the first issue of the new ETH Investors Club (EIC) magazine went live digitally, with physical copies redeemable via NFTs on the way. The EIC effort is focused on spotlighting Ethereum’s current landscape through high-quality essays, and I’m honored that my piece, The Infinite Story Machine, was featured in the inaugural “Culture Corner” section.

  • BuildBear Labs Raises $1.9M to Accelerate Development of Web3 Tools for Secure dApp Creation

    Singapore-based BuildBear Labs has secured $1.9m in funding from investors including Superscrypt, Tribe Capital, and 1kx, as well as angel investors such as Kris Kaczor and Ken Fromm. The funds will be used to speed up development of the company's flagship platform, which provides developers with testing and validation solutions for secure decentralized applications. BuildBear Labs' platform is dedicated to dApp development and testing, offering developers the ability to create customised Private Testnet sandboxes across multiple EVM and EVM-compatible blockchain networks, with features including private faucets for unlimited Native and ERC20 token minting.

  • I Don't Like Layer 2 Anymore

    I had been quite vocal about Optimism on Twitter when it was trading at north of 5bn FDV back in June last year with a view that this red coin is criminally undervalued.

  • OnChainMonkey: Reimagining Bitcoin NFTs

    Exploring Ordinals As a Medium for Art and Programmability

  • Collusion-Resistant Impartial Selection Protocol (CRISP)

    We propose the Collusion-Resistant Impartial Selection Protocol (CRISP) to improve on MACI’s honest Coordinator assumption. By leveraging threshold cryptography and fully homomorphic encryption (FHE), we enable a distributed set of Coordinators (a “Coordinator Committee”) and shift the trust model from an honest Coordinator assumption to an assumption that there is no threshold of dishonest Coordinators in the Coordinator Committee. We propose to increase the trust model further by introducing economic disincentives for compromised Coordinators.

  • Multiple incidents of stETH being stolen and cross-chained to the Blast mainnet were discovered. The victim’s mnemonic words/private keys may have been leaked.

    SlowMist founder, Yu Xian, posted on X platform stating that SlowMist and MistTrack have received at least four cases of stETH being stolen and cross-chain transferred to the Blast mainnet. The common feature is that a small amount of ETH transaction fee is sent from an address with obvious traces (including exchanges) to the stolen address, and then stETH is cross-chain transferred to the Blast mainnet for subsequent transfer, and finally the remaining small amount of ETH in the victim's address is transferred to different ETH addresses. The known loss exceeds 100 stETH, and it is likely a group event. The mnemonic phrase/private key of these victims must have been leaked, and the attackers lurked to start on the Blast mainnet. Previously, Scam Sniffer monitoring showed that a certain address lost over 10 BTC pledged on Aave and some PANDORA due to interaction (clicking on the signature authorization) with a fake Blast airdrop website, with a total loss of approximately $717,817.

  • Hong Kong has closed the application for virtual asset trading platform licenses, and a total of 22 virtual asset trading platforms are waiting for approval.

    The Hong Kong Securities and Futures Commission website shows that the deadline for virtual asset trading platform license applications was yesterday (29th). As of the update on February 28th, there were a total of 22 virtual asset trading platform applicants.The applicants include Bybit, OKX, Crypto.com, Gate.io, HTX, Bullish, and others.Ammbr, BitHarbour, and Huobi HK withdrew their applications, while Meex had its application returned by the Securities and Futures Commission.In addition, virtual asset trading platforms operating in Hong Kong that did not submit license applications to the Securities and Futures Commission by yesterday (29th) must end their business in Hong Kong by May 31, 2024, at the latest.

  • In February, NFT sales on the Bitcoin chain were approximately US$301 million, down nearly 10% from the previous month.

    According to cryptoslam data, the sales of NFTs on the Bitcoin blockchain in February reached $301,983,035.33, a decrease of nearly 10% from the previous month's $335,121,977.66, and the fourth-highest monthly sales to date. The total number of NFT transactions on the Bitcoin blockchain in February was approximately 203,000, a decrease of about 18.4% from the previous month. In addition, there were 67,139 independent buyers and 57,724 independent sellers of NFTs on the Bitcoin blockchain last month.