Key Bitcoin price metrics point to BTC downside below $22.5K

Bitcoin (BTC) faced a 1-hour $1,420 pullback connected March 3 pursuing Silvergate Bank's 57.7% banal crash which was owed to important losses and "suboptimal capitalization." The U.S. fintech-friendly slope was a cardinal fiscal infrastructure supplier for exchanges, organization investors and mining companies and immoderate investors are disquieted that its imaginable demise could person wide-ranging antagonistic impacts connected the crypto sector.

The crypto-friendly slope discontinued its integer plus outgo railway — Silvergate Exchange Network (SEN) — citing excessive risks. Silvergate besides reportedly borrowed $3.6 cardinal from the U.S. Federal Home Loan Banks System, a consortium of determination banks and lenders, to mitigate the effects of a surge successful withdrawals.

Among the impacted exchanges was Dubai-based Bybit, which announced the suspension of U.S. dollar transfers aft March 10. The determination follows Binance's planetary platform, suspending U.S. dollar fiat withdrawals and deposits connected Feb. 6.

Fiat connected and disconnected ramps person ever been a troublesome country owed to the deficiency of a wide regulatory environment, particularly successful the U.S. Additional uncertainty came from the Wall Street Journal's March 3 study connected iFinex, the holding institution down Tether and Bitfinex. Leaked documents and emails revealed the radical relied connected fake income invoices and hid down 3rd parties to unfastened slope accounts.

Despite a Wall Street Journal study alleging that Tether is being investigated by the Department of Justice, (USDT) is inactive the implicit starring stablecoin with a $71.4 cardinal marketplace capitalization. The contented has dispersed crossed the manufacture arsenic Paxos, the issuer of the 3rd largest stablecoin, was ordered by the New York Department of Financial Services connected Feb. 13 to stop issuing Binance USD (BUSD).

Let's look astatine Bitcoin derivatives metrics to amended recognize however nonrecreational traders are positioned successful the existent marketplace conditions.

Derivatives metrics amusement buyers' shrinking appetite

Traders should notation to the USD Coin (USDC) premium to measurement the request for cryptocurrency successful Asia. The scale measures the quality betwixt China-based peer-to-peer stablecoin trades and the United States dollar.

Excessive cryptocurrency buying request tin unit the indicator supra just worth astatine 104%. On the different hand, the stablecoin's marketplace connection is flooded during bearish markets, causing a 4% oregon higher discount.

USDC peer-to-peer vs. USD/CNY. Source: OKX

The USDC premium indicator successful Asian markets has been somewhat affirmative for the past 3 weeks but it is obscurity adjacent the important 4% premium from aboriginal January. In addition, the metric shows weakening request for stablecoin successful Asia, which is down from 2.5% successful the erstwhile week.

Still, the contiguous 1.5% premium should beryllium interpreted arsenic affirmative considering the bearish newsflow regarding the crypto-fiat outgo railways.

Bitcoin's quarterly futures are the preferred instruments of whales and arbitrage desks. These fixed-month contracts usually commercialized astatine a flimsy premium to spot markets, indicating that sellers are requesting much wealth to withhold colony longer.

Consequently, futures contracts should commercialized astatine a 5% to 10% annualized premium connected steadfast markets — this concern is known arsenic contango and is not exclusive to crypto markets.

Bitcoin 3-month futures annualized premium. Source: Laevitas.ch

The illustration shows traders abandoned immoderate prospects of exiting the neutral-to-bearish country connected March 3 arsenic the ground indicator moved distant from the 5% threshold. However, the existent 3% premium is little than past week's 4.5%, reflecting less investors' optimism.

On the agleam side, the 6.2% driblet successful BTC terms had a adjacent unevental interaction connected Bitcoin futures markets. Higher request for bearish bets utilizing leverage would person moved the ground indicator to the antagonistic area, known arsenic backwardation.

Additional volatility is expected connected March 14

In the week pursuing Feb. 27, Bitcoin terms mislaid 4.5%, indicating that investors are efficaciously disquieted astir contagion from Silvergate Bank. Even if the crypto exchanges and stablecoin providers denied vulnerability to the troubled fintech, the cut-off from the fintech's outgo processing strategy has raised uncertainty.

Analysts are present focused connected the announcement of the Consumer Price Index (CPI) ostentation information connected March 14. Cointelegraph noted that CPI prints thin to spark short-term volatility crossed hazard assets, though often short-lived successful Bitcoin's terms movements.

Derivatives metrics presently constituent to constricted unit from the Silvergate Bank saga, but the likelihood favour Bitcoin bears considering the diminishing request for stablecoins successful Asia and the BTC futures' premium.

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.