Bitcoin traders are crossing their fingers in hopes that a positive Fed meeting will lead to a run to $18K

Bitcoin (BTC) failed to break the $17,250 resistance on December 11 and subsequently experienced a 2.2% correction. More importantly, the last daily close above this level was more than 30 days ago – reinforcing the thesis of sizeable sellers near the $330 billion market cap mark.

Interestingly, this valuation level is slightly behind Palladium, which is the world’s 23rd most valuable trading asset with a capitalization of $342 billion. So, on the one hand, Bitcoin bulls have some reason to celebrate as the price has recovered 10% from the November 21 low of $15,500, but the bears still have the upper hand on a larger time frame as BTC is down 64% year-to-date. .

As the US consumer price index is due in December, two events are expected to determine the fate of traditional financial investors. 13 and US Federal Reserve Chairman Jerome Powell will announce the size of the next interest rate hike on December 14. Powell’s press conference will also be eagerly awaited by investors.

While several analysts criticized the limited details of each report, there was some light relief in crypto markets stemming from evidence of stock exchanges.

According to an announcement made on December 12, the derivative exchange is the latest addition to the Bybit transparency initiative, allowing users to verify their deposits using Merkle Trees.

However, regulatory risks remain high after Democratic US senator and crypto-skeptic Jon Tester boldly declared that he “sees no reason” for cryptocurrency to exist. During a Dec. 11 appearance on NBC, Tester argued that cryptocurrency has no real value, so regulating the sector would give it legitimacy.

Finally, according to Reuters, the US Department of Justice (DOJ) is about to conclude its investigation into Binanceexchange, which began in 2018. The Dec. 12 report contained a conflict between prosecutors over whether the evidence was sufficient to bring criminal charges.

Let’s look at the dimensions of derivatives to better understand how professional traders position themselves in current market conditions.

Asia-based stablecoin premium hits 2-month low

The USD Coin (USDC) premium is a good measure of China-based cryptocurrency retail trader demand. It measures the difference between China-based peer-to-peer trading and US dollars.

Excessive buying demand tends to put 100% pressure on the indicator above fair value, and during bear markets, the market supply of the stablecoin is flooded, leading to a discount of 4% or more.

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

Currently, the USDC premium is 99%, down from 102.5% on December 3, indicating less demand from Asian investors to buy stablecoins. The information becomes relevant after numerous failed attempts to break the $17,250 resistance.

However, this data should not necessarily be bearish, as the stablecoin position could only be converted (cashed out) to fiat due to counterparty risks, meaning investors withdrew from the exchanges.

Leverage buyers ignored the failed resistance break

The long-short metric only excludes external influences that may affect the stablecoin market. It also collects data from exchange clients’ positions in spot, standing and quarterly futures contracts, thus providing better insight into how professional traders are positioned.

There are occasional methodological discrepancies between the various exchanges, so readers should definitely follow the changes instead of the numbers.

The best traders of exchanges Bitcoin long-short ratio. Source: Coinglass

Although Bitcoin failed to break the $17,250 resistance, professional traders kept their leveraged long positions unchanged according to the long-short indicator.

For example, the ratio for Binance traders has decreased slightly from 1.08 on December 5 to the current level of 1.05. Meanwhile, Huobi showed a modest decline in its long-short ratio, moving from 1.04 to 1.02 in the seven days to December 12.

However, on the OKX exchange, the metric rose from 1.04 on December 5 to the current rate of 1.07. Hence, on average, traders maintained their leverage ratios during the week, which is encouraging given the weak price action.

Bitcoin’s $17,250 resistance is losing strength

There is an old saying: “If a support or resistance continues to be tested, it will weaken.” Right now, the stablecoin premium and top traders’ long-short prices – despite multiple setbacks that failed to break $17,250 in December – suggest that leverage buyers are not finding support.

Related: NYC Mayor Bear Market Stands By Bitcoin Bail Amidst FTX — Report

Although the Asian stablecoin premium is no longer available, the 1% discount is not enough for anxious or distressed sellers. In addition, the long-short ratio of the top traders remained stable compared to the previous week.

As the US Fed meeting on December 14 signals that interest rate hikes are coming to an end, data from these two markets supports the thesis that bitcoin will rise above $17,250. If this were the case, investors’ bearish sentiment could be muted as bears would become less confident, especially if the Bitcoin price touches the $17,000 level.