$16K retest is the most likely route for Bitcoin, according 2 derivative metrics
Higher odds of price correction are indicated by the higher long-to-short ratio of top traders and stronger demand in Asia for stablecoins. Market Analysis Buy this piece of crypto history. The NFTBitcoin(BTC) fell below $16,800 on December 16, the lowest level in over two weeks. The movement was also a complete turnaround from the excitement that led to the $18,370 peak Dec. 14. Bitcoin bulls can take comfort in knowing that correlation played an important role. However, the company also received $206 million worth of BTC futures contracts which were liquidated Dec. 15. Investors are now worried about some troubling economic data from the auto lending industry. The default rate from low-income consumers is now higher than 2019. Investors were concerned after the average monthly payment of a new car hit $718. This is a 26% increase in three-years. Additionally, the rate of defaults from the lowest-income consumers has now exceeded 2019 levels. Uncertainty resurfaced in cryptocurrency markets after two of the most prominent auditors abruptly ceased their services, leaving many exchanges in limbo. The website of Mazars Group, a French auditing firm, is now offline. The firm had previously worked with many exchanges, including Binance and KuCoin. Armanino, an accounting firm, has reportedly stopped providing crypto auditing services. The auditor was involved in crypto trading platforms such as OKX, Gate.io, and the troubled FTX. Curiously, Armanino, an accounting firm, was the first to establish relationships with the crypto industry. This date back to 2014. Let’s take a look at derivatives metrics and see how professional traders are positioned in current market conditions. The Asia-based stablecoin premium falls to a 2-month low. The USD Coin (USDC premium) is a good indicator of China-based crypto retail traders demand. It measures the difference in peer-to peer trades between China and the United States dollar. Source: OKX Currently, the USDC premium is at 101.8%. This is up from 99% Dec. 12. It indicates that there is more demand from Asian investors for stablecoins. This data became relevant after the 9.7% correction in five trading days following the Dec. 14 peak of $18,370. However, it should not be considered bullish as the stablecoin could have been purchased to protect against downside risks in cryptocurrencies. The long-to-short metric excludes externalities which might have directly affected the stablecoin market. Source: Coinglass. The long-to-short metric also collects data from clients of exchanges on spot, perpetual and quarterly futures contracts. This provides better information about how professional traders are positioned. Source: Coinglass. As Bitcoin fell below $16,800, professional traders reduced their leverage long positions according the long-to–short indicator. For example, the ratio of Binance traders to 1.11 decreased to 1.04. Huobi saw a slight decrease in its long to short ratio. The indicator moved from 1.01 to 0.05 in the same time period. Finally, the OKX exchange saw a 0.98 ratio. On average, traders have decreased leverage-long ratios over the past five days, which indicates less confidence in the market. The modest 101.8% stablecoin premium seen in Asia, combined with the information about top traders’ long to short indicator decline, tells us that buyers are gradually giving in to pessimism. The $206 million liquidation of long BTC futures contracts indicates that buyers continue to use excessively leverage, creating the perfect storm to allow for another leg in correction. However, weak macroeconomic data combined with uncertainty created by crypto auditing firms points to higher odds for a $16,000 Bitcoin test.