After 66 days of agonizing, the price of Bitcoin (BTC) finally broke above the psychological resistance of $ 20,000 on January 14. At the same time, the market capitalization of $ 400 billion now gives BTC a position in the top-20 global tradable assets, surpassing giants like Walmart (WMT) , Mastercard (MA) and Meta Platforms (META).
On the one hand, Bitcoin bulls have reason to celebrate after the price recovered 34% from $15,500 on November 21, but bears still have the upper hand in the larger time frame since BTC fell 52% in 12 months.
However, two events are expected to determine the fate of traditional finance investors. On January 16, China will announce its Gross Domestic Product figures and on January 18, the United States’ Retail Sales will publish.
The fourth quarter earnings season will set the tone for this week’s stock market performances, including Goldman Sachs ( GS ), Morgan Stanley ( MS ), Netflix ( NFLS ) and Procter & Gamble ( PG ).
In the cryptocurrency market, there is light relief stemming from some unexpected places – or people. Crypto entrepreneur Justin Sun is reportedly interested in acquiring assets from Digital Currency Group (DCG), the parent company of crypto lender Genesis and fund administrator Grayscale.
On January 16, Binance exchange launched an off-exchange settlement solution for institutional investors. Regulated digital asset custodian services enable additional security, allowing investors to access the exchange ecosystem without having to deposit directly on the platform.
Another positive news came from Bitcoin mining difficulty increasing by 10.26% on January 15, reflecting the increased competition for block subsidies – usually a bullish indicator for the industry. This increases the security of the network, but more importantly, it shows that miners can find a strategic source of energy and commit to the long-term investment required for Bitcoin mining.
Let’s take a look at Bitcoin derivatives metrics to better understand how professional traders are positioned in the current market conditions.
Asia-based stablecoin premium drops to 6-month low
Premium USD Coin (USDC) is a good measure of demand for China-based crypto retail traders. It measures the difference between China-based peer-to-peer trade and the United States dollar.
Heavy buying demand tends to push the indicator above fair value at 100%, and during bearish markets, stablecoin market offers are flooded, resulting in discounts of 4% or higher.
Currently, the USDC premium stands at 97.5%, down from 100% two weeks earlier, indicating lower demand for stablecoin purchases from Asian investors. The data gained relevance after a 24% rally between January 7 and January 14, as higher demand from retail traders is expected.
However, this data is not necessarily bearish as traders may dump stablecoins due to increased regulatory risk.
Futures premiums are finally showing neutral sentiment
Retail traders typically avoid quarter futures because of the price difference from the spot market. Meanwhile, professional traders prefer these instruments because they avoid fluctuations in the funding rate in futures contracts.
The two-month futures annual premium should trade between +4% and +8% in a healthy market to cover the associated costs and risks. Thus, when the futures trade below the range, it indicates a lack of confidence from the buyers of influence – usually, a bearish indicator.
The chart above shows positive momentum for the Bitcoin futures premium, currently flirting with the neutral premium at 4% – the highest in five months. This indicator represents a drastic change from the backward, bearish sentiment that has existed since the fall of FTX in November 2022 until the first day of 2023.
Bitcoin’s $20,000 support needs retesting
While the elusive rally to $20,000 looks encouraging, it has yet to be tested as a support level. At the same time, the absence of a stablecoin premium in Asia indicates a lack of demand from retail buyers. However, the current 2.5% discount does not reflect the inconvenience or distress of the sellers.
Related: Bitcoin on-chain and technical data began to suggest that the price of BTC is lower
This data supports the thesis that Bitcoin should test the $20,000 support to prove to investors that regardless of the behavior of the stock market, the bearish sentiment caused by the contagion risk of FTX and Digital Currency Group (DCG) is behind us.
There is still a chance that macroeconomic data will continue to improve, thus maintaining positive momentum.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.