Bitcoin rising above $50k without retail FOMO and high leverage bodes well for BTC.
The price of Bitcoin is up 17.5% in the past seven days and has traded above $50,000 for the first time since December 2021. The February 12 Bitcoin price action was partially attributed to the identification of Bitcoin Exchange Traded Fund (ETF) funds. On January 11th, but are current earnings strong enough to push Bitcoin (BTC) further above $50,000?
The world's largest mutual fund managers – including BlackRock, Fidelity and ARK 21Shares – have successfully launched spot bitcoin ETFs, and the instruments have surpassed $10 billion in assets in less than a month. Over the next couple of months, Bitcoin ETF revenues are expected to increase as businesses complete due diligence on newly launched investment vehicles.
With Bitcoin hitting new multi-year highs, let's see how retail investors feel about the crypto and macro markets on February 12.
Retailers track macros and cryptos
Traders' focus remains on macroeconomic conditions after the S&P 500 closed above 5,000 points for the first time in history on February 9, a 13.9% gain in three months. The bullish momentum may be temporarily halted as investors analyze a handful of companies expected to report quarterly numbers this week, including Coca-Cola, Airbnb, Coinbase and DoorDash.
US inflation The consumer price index is due on February 13, and the US Federal Reserve will guide the interest rate path. The market consensus indicates several cuts from the current level of 5.25%, which may encourage investors to move away from fixed income assets.
However, there is no guarantee that migration of risky assets will benefit cryptocurrencies. For example, Google searches for the phrase “buy bitcoin” have been stagnant for the past two weeks, indicating that the asset may be far from gaining mainstream attention, even though it's easily accessible through spot ETFs.
The data suggests that retail traders typically lag behind bull runs, which usually enter the cycle a few days or weeks after major price events. However, other indicators such as the stable coin in China do not show an increase in retail activity. Excessive retail sales for cryptocurrencies typically cause stable coin premiums to rise above 1.5%, while bear markets cause declines.
Currently, the USD Coin (USDC) stablecoin is trading higher than the official US dollar, maintaining a 1% premium over the past four weeks. Bulls may interpret the lack of excitement as a positive indicator, meaning that the usual FOMO – fear of missing out – behavior seen from retail investors has yet to emerge.
Bitcoin Pro Traders recently added to their long list of uses.
The net long-to-short ratio of top traders captures other factors that can only affect stablecoin markets. Analysts consolidate positions on spot, perpetual, and quarterly futures contracts to better assess the strength or weakness of whales and arbitrage desks.
On Binance, the long-to-short ratio of top traders now stands at 1.35, up from 1.24 on February 9, which shows that whales and arbitrage desks have increased their leverage despite a 14% weekly gain. Meanwhile, top traders in OKX have shifted from a ratio of 0.46 in favor of shorts to a current 1.07 long-to-short ratio on February 12. Basically, OKX investors initially bet on a rally above $45,000, but quickly turned their positions to bullish.
Related: Bitcoin Hits $50K For First Time Since December 2021
Data from professional Bitcoin long-to-short traders suggests confidence after BTC broke above $49,000 on February 12, making it very positive. While macroeconomic uncertainty and weakness in China's real estate markets may pose risks to bitcoin prices in the short term, it also opens the door for investors looking for alternative investments to hedge against inflation.
The sustained path above $50,000 occurred in the absence of excessive leverage and FOMO from retail investors. However, the rally is also due to continued gains in spot Bitcoin ETFs.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
