Značka: perpetual

Data suggests traders view $46,000 as Bitcoin’s final line in the sand

Dec. 13 will likely be remembered as a “bloody Monday” after Bitcoin (BTC) price lost the $47,000 support, and altcoin prices dropped by as much as 25% within a matter of moments. When the move occurred, analysts quickly reasoned that Bitcoin’s 8.5% correction was directly connected to the Federal Open Market Committee (FOMC) meeting which starts on Dec. 15.Investors are afraid that the Federal Reserve will eventually start tapering, which simply put, is a reduction of the Federal Reserve’s bond repurchasing program. The logic is that a revision of the current monetary policy would negatively impact riskier assets. While there’s no way to ascertain such a hypothesis, Bitcoin had a 67% year-to-date gain until Dec. 12. Therefore, it makes sense for investors to pocket those profits ahead of market uncertainties and this could be connected to the current correction seen in BTC price.Top cryptos weekly performance on Dec. 13. Source: NomicsBitcoin price retraced 8.2% over the past week, but it also outperformed the broader altcoin market. That is in stark contrast to the last 50 days because the leading cryptocurrency’s market share (dominance) dropped from 47.5% to 42%. Investors could have simply fled to Bitcoin due to its relatively smaller risk than altcoins.Tether’s discount bottomed at 4%The OKEx Tether (USDT) premium or discount measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar currency. Figures above 100% indicate an excessive demand for cryptocurrency investing. On the other hand, a 5% discount usually indicates heavy selling activity.OKEx USDT peer-to-peer premium vs. USD. Source: OKExThe Tether indicator bottomed at 96% on Dec. 13, which is slightly bearish but not alarming for a 10% total cryptocurrency market capitalization drop. However, it has been over two months since this metric surpassed 100%, signaling a lack of excitement from China-based traders.To further prove that the Dec. 13 price crash only slightly impacted investor sentiment, the total liquidations over the 24 hours was $400 million.Total derivatives exchange liquidations on Dec. 13. Source: Coinglass.comMore importantly, only $300 million of long leverage contracts were forcefully terminated due to insufficient margin. This figure looks insignificant when compared to the Dec. 3 crash, when $2.1 billion of leveraged buyers had their positions closed.There’s no excessive demand from Bitcoin bears, at the momentTo further prove that the crypto market structure was not strongly affected by the sharp price drop, traders should analyze the perpetual futures. These contracts have an embedded rate and usually charge a fee every eight hours to balance the exchange’s risk. A positive funding rate indicates that longs (buyers) are demanding more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, and this causes the funding rate to turn negative.Bitcoin perpetual futures 8-hour funding rate. Source: CoinglassConsidering that most cryptocurrencies suffered considerable losses on Dec. 13, the overall market structure held nicely. Had there been excessive demand for shorts who were betting on a Bitcoin price drop below $46,000, the perpetual futures 8-hour funding would have gone below 0.05%.Tether trading at a 4% discount in the China-based markets, $300 million in long contract liquidations and a neutral funding rate is not a sign of a bear market. Unless these fundamentals change significantly, there is no reason to call for $42,000 or lower Bitcoin prices.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin and altcoins took a hit, but derivatives data reflects a calmer market

Looking at the winners and losers of the past week clearly shows that traders endured some serious heat as the total crypto market capitalization dropped by 12.7% when Bitcoin fell to $41,000. This sharp downside move knocked the figure from $2.37 trillion to $1.92 trillion on Dec. 3 and a total of $2 billion long future contracts were liquidated.Top winners and losers from top 80 coins. Source: NomicsBitcoin (BTC) price retraced 14.6% over the past week, effectively underperforming the broader altcoin market. Part of this unusual movement can be explained by the performance seen in decentralized applications which held up better than most of the market. Data shows Ether (ETH) traded down 6.0%, Binance Coin (BNB) lost 7.3% and Solana (SOL) dropped by 7.8%.This week’s top gainers include OKEx’s OKB token (OKB) and Bitfinex’s UNUS (LEO). Perhaps these benefited from not having a United States entity because the regulatory uncertainties in the region continue to increase. Moreover, scaling solutions Polygon (MATIC) and Algorand (ALGO) benefited from Ethereum’s $40 or higher network transaction fees.Terra (LUNA) featured on last week’s top performers after its built-in token burn mechanism significantly reduced the supply. Meanwhile, Stacks (STX), previously known as Blockstacks, pumped after D’Cent wallet included support for SIP010 tokens.Sharing solutions had a disappointing weekAmong the worst performers were three decentralized sharing solutions: Theta Network (THETA), Filecoin (FILE), and Internet Computer (ICP). They were not alone, as some of the sectors’ altcoins below the top-80 also crashed. Siacoin (S.C.) endured a 34% drawdown and Ankr Network (ANKR) dropped by 31.8%. Chiliz (CHZ) suffered direct competition after Binance successfully launched an independent soccer fan token called SANTOS. Initially, Chiliz’ platform was created to host exclusive promos, services and voting for their fan tokens and more recently the project ventured into the non-fungible NFT market. However, that initiative also lost impact after soccer player Neymar launched a collection with NFTStar.Despite being among the bottom performers, decentralized exchange aggregator 1inch Network (1INCH) concluded a $175 million Series B investment round and these funds will be used to expand the protocol’s utility.Tether’s premium and the futures’ perpetual premium held up wellThe OKEx Tether (USDT) premium measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar currency, and in the past week it decreased slightly.OKEx USDT peer-to-peer premium vs. USD. Source: OKExCurrently the indicator has a 98% reading, which is slightly bearish, signaling weak demand from crypto traders to convert cash into stablecoins. Even at its best moment over the past two months, it failed to surpass 99%, so Chinese players have not been excited about the general market.The overall impact of last week’s correction was a drop in the total futures open interest, down 28% to $16.7 billion. Nevertheless, the move was expected since the total market cap retraced and some $3.9 billion worth of liquidations took place during the week.More importantly, the funding rates on Bitcoin and Ethereum futures quickly recovered from Dec. 3 price crash. Even though longs (buyers) and shorts (sellers) are matched at all times in any futures contract, their leverage varies.Consequently, to balance their risk, exchanges will charge a funding rate to whichever side is using more leverage and this fee is paid to the opposing side.BTC and ETH perpetual futures 8-hour funding rates. Source: Coinglass.comData reveals that a modest bearish trend occurred on Dec. 3 and 4 as the 8-hour funding rate went below zero. A negative funding rate shows that shorts (seller) were the ones paying the fees, but the movement faded as soon as BTC and ETH prices bounced 15% from their lows.The above data might not sound encouraging, but considering that Bitcoin suffered considerable losses this week, the overall market structure held nicely. If the situation was worse, one would definitively not expect a 99% Tether premium or a positive perpetual funding rate.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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