When Bitcoin (BTC) tested the support at $ 43,000 for the third day in a row, the whales bought the decline on the futures exchanges. Although the price hasn’t changed much, the Bitcoin futures premium hit its lowest level in 6 months. This indicator coincides with December 11, 2020, when Bitcoin hit a low of $ 17,600 just ten days after hitting an all-time high of $ 19,915.
In December 2020, Derivatives stock sparked a 95% surge in 23 days, taking Bitcoin to a new high of $ 42,000. In addition to bottoming out the futures premium, rumors of potentially harmful US regulation played a central role in the market downturn in both cases.
Regulatory uncertainty is back in the spotlight
This time the US Treasury Secretary Janet Yellen stated at the WSJ Board of Directors General Summit on May 4th:
“There are problems with money laundering, the bank secrecy law, the use of digital currency for illegal payments, consumer protection and other similar issues.”
On May 6, the Chairman of the US Securities Market Commission, Gary Gensler spoke to Congress to ensure better oversight of the regulations into the cryptocurrency space. He said:
“Right now there is no market regulator for these cryptocurrency exchanges, so there really is no protection against fraud or tampering.”
To increase uncertainty about regulation, On May 11, the US Securities and Exchange Commission warned investors about the risks of mutual funds that are exposed to Bitcoin futures.
When Bitcoin hit an all-time high of $ 19,915 on December 1 and the futures premium rose over 15%, the premium responded to the price correction.. While the 8% low seems close to the previous month’s average, it’s very modest considering that Bitcoin is up 90% in two months.
Note that the futures premium rose to 15% as the $ 17,600 level showed its strength, indicating optimism.
The current situation started differently as the market was overly optimistic from the start. However, The situation has changed dramatically over the past week as Bitcoin has fallen 26%. This move caused the futures premium to hit its lowest level in 6 months at 8%.
Whales aggressively bought under $ 43,000
However, the bearish sentiment on May 17th was short-lived. Well, the whales finally decided it was time to buy autumn.
The indicator “long to short” The number of professional traders is calculated based on the consolidated positions of clients, including margin, perpetual and futures contracts. This metric provides a broader view of professional traders’ effective net position by collecting data from multiple markets.
OKEx professional traders rose from a long-short ratio of 1.62 to a high of 2.74 on May 16 as Bitcoin tested the $ 43,000 support in the early hours of May 17. This data shows that traders and market makers were long positions almost three times more than they were short, which is highly unusual.
While his bullish bet stands, it suggests a full pattern from the previous week. The business intelligence company MicroStrategy also confiscated an additional $ 10 million in Bitcoin at an average price of USD 43,663.
While it may be too early to explain the correction has ended, there appears to be enough evidence of the futures premium and intense whale buying activity below $ 43,000.
If history repeats itself and there is a 95% rally, Bitcoin could hit $ 83,000 by mid-June.
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