A mild sense of hope emerged among Bitcoin (BTC) investors after the June 18 drop to $17,600 becomes more distant and an early ascending pattern points toward $21,000 in the short-term.
Recent negative remarks from lawmakers continued to curb investor optimism. In an interview with Cointelegraph, Swiss National Bank (SNB) deputy head Thomas Muser said that the decentralized finance (DeFi) ecosystem would cease to exist if current financial regulations are implemented in the crypto industry.
An article published in “The People’s Daily” on June 26 mentioned the Terra network’s collapse and local blockchain expert, Yifan He referred to crypto as a Ponzi scheme. When asked by Cointelegraph to clarify the statement on June 27, Yifan He stated that “all unregulated cryptocurrencies including Bitcoin are Ponzi schemes based on my understanding.”
On June 24 Sopnendu Mohanty the chief FinTech officer of the Monetary Authority of Singapore (MAS) pledged to be “brutal and unrelentingly hard” on any “bad behavior” from the cryptocurrency industry.
Ultimately, Bitcoin investors face mixed sentiment as some think the bottom is in and $20,000 is support. Meanwhile, others fear the impact that a global recession could have on risk assets. For this reason, traders should analyze derivatives markets data to understand if traders are pricing higher odds of a downturn.
Bitcoin futures show a balanced force between buyers and sellers
Retail traders usually avoid monthly futures because their price differs from regular spot markets at Coinbase, Bitstamp and Kraken. Still, those are professional traders’ preferred instruments as they avoid the funding rate fluctuation of the perpetual contracts.
These fixed-month contracts usually trade at a slight premium to spot markets because investors demand more money to withhold the settlement. Consequently, futures should trade at a 5% to 10% annualized premium in healthy markets. One should note that this feature is not exclusive to crypto markets.
Whenever this indicator fades or turns negative, this is an alarming, bearish red flag signaling a situation known as backwardation. The fact that the average premium barely touched the negative area while Bitcoin traded down to $17,600 is remarkable.
Despite currently holding an extremely low futures premium (basis rate), the market has kept a balanced demand between leverage…
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