Bitcoin (BTC) surged 11% between Jan 20 and 21, hitting $23,000 and shattering bear expectations for a pullback to $20,000. Even more noticeable is the move that has brought demand from Asian retail investors, in response to data from the important thing stablecoin bonus index.
Traders should note that the high-tech Nasdaq 100 Index also gained 5.1% between Jan. 20-23, fueled by investors’ hopes of reopening business in China after COVID-19 lockdowns and weaker-than-expected economic data within the US and Eurozone.
Another batch of bullish news got here on January 20 after US Federal Reserve Governor Christopher Waller boosted market expectations for a 25 basis point rate hike in February. Several major corporations are expected to submit their latest quarterly earnings this week to finish the puzzle, including Microsoft, IBM, Visa, Tesla and Mastercard.
Essentially, the central bank is aiming for a “close landing” or controlled collapse of the economy, with fewer jobs and fewer inflation. However, if corporations struggle with their balance sheets because of the increased cost of capital, profits are inclined to fall, and ultimately layoffs might be much higher than expected.
On January 23, research firm Glassnode identified that long-term Bitcoin investors have held losses for greater than a yr, in order that they are likely more resilient to future adversarial price movements.
Let’s take a have a look at derivatives indicators to raised understand how skilled traders are positioned in the present market conditions.
Asian stablecoin premium is approaching FOMO area
The USD Coin (USDC) premium is indication of the demand for cryptocurrency retail trading based in China. Measures the difference between Chinese peer-to-peer transactions and the US dollar.
Excessive buying demand puts pressure on the above-fair ratio at 103%, and through declines, the stablecoin market offer is flooded, leading to a 4% or higher discount.
Currently, the USDC premium is 103.5%, up from 98.7% on Jan. 19, signaling higher demand for purchasing stablecoins from Asian investors. The move coincided with Bitcoin’s 11% each day gain on Jan. 20 and indicates moderate FOMO from retail traders because the BTC price approached $23,000.
Professional traders usually are not particularly excited in regards to the recent gains
The long-to-short metric excludes externalities that would only affect the stablecoin market. It also collects data from the exchange’s clients’ positions on spot, perpetual and quarterly futures contracts, thus offering higher information on the position of skilled traders.
There are occasional methodological discrepancies between different exchanges, so readers should monitor changes fairly than absolute numbers.
The first trend you’ll be able to see is that top traders Huobi and Binance are extremely skeptical in regards to the recent rally. These whales and market makers haven’t moved their levels from long to short within the last week, which implies they’re unsure of shopping for above $20,500 but are not looking for to go short (bearish) positions.
Interestingly, the highest traders on OKX reduced their net long positions (bull) until January 20, but modified their positions drastically in the course of the last phase of the bull market. Looking on the longer 3-week timeframe, their current long to short ratio of 1.05 stays lower than the 1.18 on Jan 7.
Related: The worst days of bitcoin miners could also be over, but a number of key hurdles remain
Bears are shy, which makes for an ideal opportunity for a bull run
The 3.5% premium for stablecoins in Asia indicates a greater appetite from retail investors. Additionally, the long-short ratio of top traders shows no increase in demand from short positions, regardless that Bitcoin hit its highest level since August.
In addition, $335 million Liquidation in brief (bearish), BTC futures between Jan 19 and Jan 20 signal that sellers are still over-leveraging, creating the proper storm for the following phase of the bull market.
Unfortunately, the worth of Bitcoin continues to be heavily influenced by the performance of the stock markets. Given how resilient BTC has been in the course of the uncertainty surrounding the Digital Currency Group’s Genesis Capital bankruptcy, the chances are moving towards $24,000 or $25,000.
The views, thoughts and opinions expressed herein are solely those of the authors and don’t necessarily reflect or represent the views and opinions of Cointelegraph.
This article doesn’t contain investment advice or recommendations. Every investment and trading move involves risk and readers should do their very own research when making decisions.