Bitcoin traders’ bullish bias persists as BTC price drops to $37k.
Bitcoin (BTC) briefly touched $38,000 on November 24, but faced strong resistance at the price level. On November 27, the price of Bitcoin traded below $37,000, unchanged from a week ago.
What is noteworthy is the unwavering strength of BTC derivatives, indicating that the bulls remain steadfast in their intentions.
A curious development is taking place in China as Tether (USDT) trades below its real value against the local currency, the yuan. This difference is often caused by the difference between professional traders and retail customers engaged in retail trading.
How have regulations affected Bitcoin derivatives?
To see whales and arbitrage desk exposure using Bitcoin derivatives, one should evaluate the size of BTC options. By examining put (sell) and call (buy) options, we can estimate the prevailing bullish or bearish sentiment.
Since November 22nd, options have consistently trailed call options in volume, averaging 40%. This shows a reduction in the need for countermeasures – a surprising development amid heightened regulatory scrutiny following Binance's filing of charges against the Kraken exchange from the United States Department of Justice (DOJ) and the US Securities and Exchange Commission.
While investors may not foresee disruptions to Binance's services, the possibility of further regulatory action on exchanges serving US customers has increased. Additionally, individuals who have previously relied on obfuscating their activities may think twice when the DOJ has access to historical transactions.
Additionally, it is uncertain whether former CEO Changpeng “CZ” Zhao's arrangement with authorities will extend to other unregulated exchanges and payment gateways. In conclusion, the consequences of recent regulatory actions are uncertain, and the current mood is pessimistic, with investors fearing further restrictions and possible actions targeting market makers and stablecoin issuers.
To find out whether the Bitcoin options market is unusual, BTC futures contracts, especially the monthly ones, are preferred by professional traders with fixed funding rates in independent markets. Typically, these instruments trade at a 5% to 10% premium to get the extended settlement period.
Between November 24th and 26th, the BTC futures premium flirted with excessive optimism, hovering around 12%. However, on November 27, Bitcoin price dropped 9% as it tested support at $37,000 – a neutral level but with a bullish ceiling.
Retail traders are less optimistic after the ETF's hops fade.
Turning to retail interest, apathy is growing due to the lack of a short-term positive trigger, such as the 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 against the yuan hit its lowest point in more than four months on the OKX exchange. This premium serves as a measure of interest among China-based retail crypto traders and measures the difference between peer-to-peer trading and the US dollar.
Since November 20, USDT has been trading at a discount, indicating increased interest in liquidating cryptocurrencies or regulatory concerns. In both cases, it is far from a positive indicator. Additionally, the last positive premium of 1% occurred 30 days ago, indicating that retail traders were not particularly interested in the recent rally to $38,000.
Related: What's Next for Binance's Changpeng ‘CZ' Zhao?
Basically, regardless of the regulatory landscape, professional traders remain undaunted by short-term corrections. Contrary to doomsday predictions, the status of Binance remains unscathed, and the low trading volume on unregulated exchanges may increase the likelihood of acquiring a Bitcoin ETF.
Differences in time horizons may explain the optimism between professional traders and retail investors. In addition, recent regulatory measures have paved the way for increased participation by institutional investors, providing opportunities for future growth.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
