The lack of a CME Bitcoin futures premium, unrelenting record-high inflation, and investor fears about the economy are all factors weighing on the price of Bitcoin. The Bitcoin (BTC) price chart over the last few months shows nothing but a negative perspective, and it’s no secret that the cryptocurrency has continuously produced lower lows since breaking through $48,000 in late March.
Surprisingly, as the decline continues to erode market confidence and risk appetite, the gap in support levels has grown wider. For example, the most recent $19,000 baseline is about $10,000 less than the previous support. If the same trend continues, the next logical price level would be $8,000.
The Financial Stability Board (FSB), a global financial regulator comprised of all G20 countries, declared on July 11 that a framework of recommendations for the cryptocurrency sector is expected in October. The FSB also stated that international authorities must monitor cryptocurrency markets by the idea of “same activity, same risk, same regulation.”
The CME’s Bitcoin futures contracts premium reflects the negative newsflow. The differential between longer-term futures contracts and current spot prices in conventional markets is measured by this data.
This is an alarming red signal whenever this indicator diminishes or turns negative. This is also known as backwardation, and it indicates the presence of bearish emotion.
Take note of how the indicator has been trading below the “neutral” area since early April when Bitcoin failed to hold over $45,000. The data suggest that institutional traders are hesitant to open leveraged long bets, even though the structure is not yet negative.
Despite Bitcoin’s 11% drop from July 9 to July 12, top traders have boosted their leverage longs. Binance’s long-to-short ratio remained relatively stable at 1.13, while Huobi’s top traders began at 0.95 and concluded at 0.93.
Regulatory pressure is unlikely to abate soon, and the Federal Reserve has limited options for suppressing inflation without precipitating an economic disaster. As a result, professional traders are hesitant to purchase the dip because Bitcoin’s connection to traditional assets remains high.
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