Bitcoin (BTC<\/a>) price lost 11.3% between Dec. 14 and Dec. 18 after briefly testing the $18,300 resistance.<\/p>\n The move followed a seven-day correction of 8% in the S&P 500 futures after United States Federal Reserve Chair Jerome Powell issued hawkish statements<\/a> after raising the interest rate on Dec. 14.<\/p>\n Macroeconomic trends have been the main driver of recent movements. For instance, the latest bounce from the five-week-long ascending channel support at $16,400 has been attributed to the Central Bank of Japan\u2019s efforts to contain inflation<\/a>. <\/p>\n The Bank of Japan increased the limit on government bond yields on Dec. 20, which are now trading at levels unseen since 2015.<\/p>\n However, not everything has been positive for Bitcoin, as miners have struggled with the hash rate nearing an all-time high and increased energy costs. For example, on Dec. 20, Bitcoin miner Greenidge reached an agreement with its creditor<\/a> to restructure $74 million worth of debt \u2014 although the deal requires the miner to sell nearly 50% of it equipment.<\/p>\n Moreover, publically listed Bitcoin mining company Core Scientific reportedly filed for Chapter 11 bankruptcy<\/a> on Dec 21. While the company continues to generate positive cash flows, the income is insufficient to cover it operational costs, which involve repaying the lease for its Bitcoin mining equipment.<\/p>\n During these events, Bitcoin has held $16,800, so there are buyers at these levels. But let\u2019s look at crypto derivatives data to understand whether investors have increased their risk appetite for Bitcoin.<\/p>\n Fixed-month futures contracts usually trade at a slight premium to regular spot markets because sellers demand more money to withhold settlement for longer. Technically known as contango, this situation is not exclusive to crypto assets.<\/p>\n In healthy markets, futures should trade at a 4% to 8% annualized premium, which is enough to compensate for the risks plus the cost of capital.<\/p>\n It becomes clear that the attempts to push the indicator above zero have utterly failed over the past 30 days. The absence of a Bitcoin futures premium indicates higher demand for bearish bets, and the metric worsened from Dec. 14 to Dec. 21. <\/p>\n The current 1.5% discount indicates professional traders\u2019 reluctance to add leveraged long (bull) positions despite being actually paid to do so. <\/p>\n Still, investors should analyze the long-to-short ratio to exclude externalities that have solely impacted the quarterly contracts\u2019 premium. <\/p>\n The metric gathers data from exchange clients\u2019 positions on spot and perpetual contracts, better informing how professional traders are positioned.<\/p>\n Even though Bitcoin briefly traded below $16,300 on Dec. 19, professional traders did not reduce their leverage long positions according to the long-to-short indicator. For instance, the Huobi traders\u2019 ratio stabilized at 1.01 between Dec. 16 and Dec. 21.<\/p>\n Similarly, OKX displayed a modest increase in its long-to-short ratio, with the indicator moving from 1.02 to the current 1.04 in five days. <\/p>\n Lastly, the metric slightly increased from 1.05 to 1.07 at Binance, confirming that traders did not become bearish after the ascending channel support was tested.<\/p>\n Traders cannot ascertain that the absence of a futures premium necessarily translates to bearish price expectations. For instance, the lack of confidence in the exchanges could have driven away potential leverage buyers.<\/p>\nBitcoin price retreats to channel support<\/h2>\n
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Bitcoin futures are back to backwardation<\/h2>\n
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Top traders unwilling to let go of their longs<\/h2>\n
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Strength of $16,800 support is a bullish indicator<\/h2>\n