Don't’ believe the hype — Bitcoin price rally to $17K reflects improving sentiment

Bitcoin (BTC) terms gained 6.1% betwixt Nov. 28 and Nov. 30 aft concisely investigating the $17,000 support. Favorable regulatory winds mightiness person helped substance the rally aft the Binance speech announced the acquisition of a regulated crypto speech successful Japan connected Nov. 30.

Bitcoin 12-hour terms index, USD. Source: TradingView

Binance unopen its operations successful Japan successful 2018 aft being warned by the Japan Financial Services Agency for operating without a license. The acquisition of Sakura Exchange BitCoin would people the re-entry of Binance successful the Japanese market.

Furthermore, Gemini speech announced caller regulatory approvals successful Italy and Greece connected Nov. 30. The speech was granted registration arsenic a virtual currency relation with Italy's payments services regulator. Gemini was approved arsenic an speech and custodial wallet supplier successful Greece.

However, not everything has been affirmative connected the regulatory front. In abstracted letters from Nov. 28, Ron Wyden, seat of the United States Senate Finance Committee, requested accusation from six cryptocurrency exchanges. The lawmaker targeted the necessity of "consumer protections on the lines of the assurances that person agelong existed for customers of banks, recognition unions and securities brokers."

Wyden requested the six firms supply answers by Dec. 12 connected safeguards of user assets and marketplace manipulation. The Senate Agriculture Committee has besides scheduled a proceeding to research the illness of FTX connected Dec. 1.

During these events, Bitcoin has been trying to interruption supra $17,000 for the past eighteen days, truthful immoderate selling unit intelligibly remains supra that level.

The astir apt culprit is the hazard of capitulation from Bitcoin miners aft they’ve seen their profits squeezed by falling spot prices and surging Bitcoin mining difficulty. Cointelegraph noted that Bitcoin miners look a important squeeze aft expecting to merchantability accumulated BTC astatine a profit.

Let's look astatine crypto derivatives information to recognize whether investors stay risk-averse to Bitcoin.

Futures markets are nary longer successful backwardation

Fixed-month futures contracts usually commercialized astatine a flimsy premium to regular spot markets due to the fact that sellers request much wealth to withhold colony for longer. Technically known arsenic contango, this concern is not exclusive to crypto assets.

In steadfast markets, futures should commercialized astatine a 4% to 8% annualized premium, which is capable to compensate for the risks positive the outgo of capital.

Bitcoin 2-month futures annualized premium. Source: Laevitas.ch

Considering the information above, derivatives traders person improved their expectations and the Bitcoin futures premium is nary longer antagonistic — meaning the request for bullish and bearish leverage is arsenic balanced.

Still, the contiguous 0% premium is acold from the 4% threshold for bullishness, indicating nonrecreational traders' reluctance to adhd leveraged agelong (bull) positions.

Another notable improvement is the long-to-short ratio improving implicit the past 2 days. To exclude externalities that mightiness person solely impacted the quarterly contracts, traders should analyse the apical traders' long-to-short ratio.

The metric besides gathers information from speech clients' positions connected the spot and perpetual contracts, which amended informs however nonrecreational traders are positioned.

Exchanges' apical traders Bitcoin long-to-short ratio. Source: Coinglass

Even though Bitcoin failed to interruption $17,000 connected Nov. 30, nonrecreational traders somewhat accrued their leverage agelong positions according to the long-to-short indicator. For instance, the Binance traders' ratio improved from 1.07 connected Nov. 28 and presently stands astatine 1.10.

Similarly, OKX displayed a humble summation successful its long-to-short ratio, arsenic the indicator moved from 0.98 to the existent 1.03 successful 2 days. The metric somewhat declined to 1.02 astatine the Huobi speech and this shows that traders did not go bearish aft the latest absorption rejection.

The lack of antagonistic terms moves is simply a bullish indicator

Traders should not reason that the lack of futures premium reflects worsening marketplace conditions due to the fact that the broader information from the long-to-short ratio has shown whales and marketplace makers adding leverage longs.

The Bitcoin terms question has been amazingly affirmative considering the caller antagonistic newsflow and fearfulness relating to the imaginable of a regulatory crackdown and miners' quality to withstand a much extended crypto winter.

It volition apt instrumentality longer for investors to regain assurance and consciousness that the existent contagion risks are over. As a result, bears could proceed to exert unit and prolong Bitcoin beneath $17,000 successful the short-term.

The views, thoughts and opinions expressed present are the authors’ unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.