Bitcoin seems to be around forever; the transaction price was under $18,000, but it was actually 40 days ago. Cryptocurrency traders tend to have short-term memory and, more importantly, they pay less attention to negative news during bull markets. A good example of this behavior is BTC’s 15% gain since February 13th despite a steady stream of bad news in the crypto market.
For example, on Feb. 13, the New York State Department of Financial Services ordered Paxos to “stop minting” Paxos-issued Binance Dollars A stablecoin pegged to the U.S. dollar. Similarly, Reuters reported on Feb. 16 that more than $400 million was transferred from a bank account controlled by Binance.US to trading firm Merit Peak an independent entity also said to be controlled by Binance CEO Changpeng Zhao.
The wave of regulatory pressure continued on Feb. 17, with the SEC announcing a $1.4 million settlement with former NBA player Paul Pierce for promoting “false and misleading statements” about the EthereumMax (EMAX) token on social media. ".
None of the headwinds have shattered investor optimism after weak economic data suggested the Fed has less room to continue raising interest rates. The Philadelphia Fed manufacturing index showed a 24% drop on February 16, and U.S. housing starts increased by 1.31 million units month-on-month, lower than the expected 1.36 million units.
Let’s take a look at Bitcoin derivatives indicators to better understand where professional traders are positioned in current market conditions. Traders should refer to USD Coin
central bank of the united states premium to gauge demand for cryptocurrencies in Asia. The index measures the difference between peer-to-peer stablecoin transactions in China and the U.S. dollar.
Excessive cryptocurrency buying demand could pressure the metric above fair value by 104%. On the other hand, market quotes for stablecoins flood during bear markets, creating discounts of 4% or more. Currently, USDC is trading at a 2.7% premium, unchanged from the week prior to Feb. 13, indicating moderate buying demand for the stablecoin in Asia. However, positive indicators suggest that retail traders are not deterred by the recent news flow or Bitcoin’s rejection at $25,000. Quarterly futures are often avoided by retail traders due to price differences from the spot market. At the same time, professional traders prefer these tools because they prevent fluctuations in funding rates in perpetual contracts.
In a healthy market, two-month futures should trade at an annualized premium of +4% to +8% to cover costs and associated risks. Therefore, when futures trade below that range, it signals a lack of confidence among leveraged buyers. This is usually a bearish indicator. The chart shows bullish momentum, as the Bitcoin futures contango breached the 4% neutral threshold on Feb. 16. The move represents a return to the neutral to bullish sentiment that prevailed before early February. So, it’s clear that professional traders are becoming more comfortable with Bitcoin trading above $24,000. While Bitcoin’s 15% price gain since February 13 was encouraging, the regulatory news was mostly negative. Investors cheered the Fed's diminished ability to rein in the economy and tame inflation. So, one can understand how those bearish events could not break the spirits of cryptocurrency traders.
Ultimately, the correlation to the S&P 500 50-day futures remains high at 83%. Correlation statistics above 70% indicate that asset classes are moving in tandem, implying that the macroeconomic scenario may determine the overall trend.
Currently, both retail and professional traders are showing signs of confidence, according to stablecoin premium and BTC futures indicators. Therefore, a continuation of the upside is possible as the absence of a price correction usually marks a bull market despite bearish events, especially regulatory ones.
