A glimmer of hope has surfaced among Bitcoin (BTC) investors as the memory of the drop to $17,600 on June 18 fades and a new upward trend hints at a short-term target of $21,000.
Despite this, recent negative comments from officials continue to dampen investor confidence. Swiss National Bank (SNB) deputy head Thomas Muser expressed concerns that the decentralized finance (DeFi) ecosystem could face serious challenges if stricter financial regulations are imposed on the crypto industry.
An article in The People’s Daily on June 26 cited the collapse of the Terra (LUNA) network, now known as Terra Classic (LUNC), with local blockchain expert Yifan He labeling cryptocurrencies as Ponzi schemes. When questioned about this statement on June 27, Yifan He reiterated his belief that all unregulated cryptocurrencies, including Bitcoin, operate as Ponzi schemes.
Furthermore, Sopnendu Mohanty, the chief fintech officer of the Monetary Authority of Singapore (MAS), vowed to crack down harshly on any misconduct within the cryptocurrency industry on June 24.
Investors’ opinions on Bitcoin are divided, with some believing that the price has hit its lowest point and that $20,000 will act as a support level, while others fear the potential implications of a global economic downturn. Hence, traders are advised to closely monitor data from the derivatives markets to gauge whether there is an increased likelihood of a market decline.
Bitcoin Futures Market Indicates Equilibrium Between Buyers and Sellers
Retail traders typically steer clear of monthly futures contracts due to their pricing variations compared to standard spot markets like Coinbase, Bitstamp, and Kraken. Conversely, professional traders favor these fixed-term contracts to avoid the funding rate fluctuations inherent in perpetual contracts.
In healthy markets, futures typically trade at a slight premium of 5% to 10% annually compared to spot markets, reflecting the need for additional compensation to hold the settlement. A diminishing or negative premium, termed backwardation, signals a bearish trend. Despite Bitcoin dropping to $17,600, the premium remained relatively stable, hinting at balanced demand between buyers and sellers.
In addition to futures, traders should also evaluate Bitcoin options markets, particularly the 25% delta skew, which indicates whether whales and arbitrage desks are overvaluing downside or upside protection. The recent skew levels suggest a cautious stance from professional traders but not at extreme risk-averse levels.
On-Chain Data Suggests Bitcoin May Have Reached a Bottom
Certain metrics indicate that Bitcoin potentially hit bottom on June 18 following significant BTC sales by miners. Glassnode, an on-chain analysis firm, highlighted the Bitcoin Mayer Multiple dropping below 0.5, a rare occurrence not witnessed since 2015.
While there are concerns surrounding liquidity and leverage for whales and arbitrage desks, signs of alleviated contagion risks are awaited. Until such evidence emerges, Bitcoin’s price is likely to remain below $22,000.
The perspectives shared in this article belong solely to the author and may not necessarily represent Cointelegraph’s views. It’s essential to conduct thorough research before making any investment or trading decisions.
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