Bitcoin saw a big change between April 25 and May 1, from $27,200 to $30,000. From a business perspective, the 10.5% move sounds alarming, resulting in $340 million in leveraged BTC futures contract liquidations.
However, from a larger angle, Bitcoin
BTC
tickers down
$28,702
Prices are up 72% annually through 2023, while the S&P 500 stock market has accumulated a 9% gain.
BTC price rises on weak US dollar, banking crisis
Bitcoin’s bullish price came as the dollar strength index, which measures the US dollar against a basket of foreign currencies, neared its lowest level in 12 months.
The indicator stood at 102, down from 105.3 eight weeks earlier, as investors paid attention to the high probability of further intervention from the United States Treasury to contain the banking crisis.
On May 1, the California Department of Financial Protection and Innovation closed First Republic Bank (FRB) and transferred control to the Federal Deposit Insurance Corporation (FDIC). The FDIC then engaged JPMorgan Chase in a buyout and notional agreement to protect depositors. FRB joins Silicon Valley Bank and Signature Bank as the latest US banks to fail in 2023.
Now, the Federal Reserve’s upcoming decision on interest rates on May 3 makes Bitcoin investors question the support level of $28,000. By raising the rate of return closer to 5%, the central bank removes the incentive for investing in risky markets; Therefore, it is really not good for the price of Bitcoin.
Let’s take a look at some metrics to better understand how to position professional customers in the current market environment.
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Bitcoin’s stock market shows little optimism
Market shares provide insight into the position of professional traders because they allow investors to borrow cryptocurrency to leverage their positions.
For example, OKX offers a leverage indicator based on the vertical/BTC ratio. Investors can increase their exposure by playing Coin Stats to buy Bitcoin. On the other hand, Bitcoin borrowers can bet on the reduction of the cryptocurrency’s price.
OKX stablecoin/BTC lending rate. Source: OKX
The chart above shows that the lending volume of OKX clients increased between April 17 and April 30. That is concerning, as it shows that leverage has been used to support Bitcoin’s price gains.
Also, the 43% number in favor of long BTC on April 27 was the highest level in 40 days, showing the level of excitement as Bitcoin hovered around $30,000, which changed to 32% after the latest correction and $28,400.
To exclude external factors that may have affected only the stock market, traders should analyze long-to-short metrics. The metric collects data from the position of customers who have changed there, the contract will be permanent and quarterly, thus providing better information on how to keep pro customers.
Related: What Gensler’s hearing means for US crypto regulation and policy
The BTC producer market shows no signs of bearishness
There is some systematic overlap between variables, so readers should examine variables rather than absolute numbers.
Exchange’ top Bitcoin market long-to-short ratio. Source: Coinglass
Although Bitcoin did not break the $30,000 barrier, professional traders have increased the length of time they are working with futures, as the long indicator is becoming shorter.
On the crypto exchange OKX, the long-to-short ratio increased significantly, from 0.66 on April 27 to 0.93 on May 1. Also, on Binance, the long-to-short ratio also increased, the long interest, and from 1.12 on April 25. on April 30 to 1.26.
Therefore, despite the price being 5% higher from the high of $29,970 on April 30, the bears are using futures contracts without the confidence to enter leveraged shorts. To put it simply, even if Bitcoin tests $ 28,000, the bull should not throw in the towel, because both the side and the future of the market show that they remain positive.
This article does not contain investment advice or recommendations. Any investment in trading involves risk, and readers should do their own research when making decisions.
