Bitcoin (BTC) rose 11% between January 20 and January 21 to reach the $23,000 level, shattering bearish expectations of a drop to $20,000. Even more notable is the move, which brought demand from Asian retail investors, according to data from the key stable premium indicator.
Traders should note that the technology-heavy Nasdaq-100 index also gained 5.1% between Jan. 20 and Jan. 23, boosted by investors’ hopes for China to reopen for business after temporary shutdowns caused by the CCP’s anti-virus measures and weaker , than expected economic data in the US and the eurozone.
More bullish information came on January 20 after US Federal Reserve Governor Christopher Waller boosted market expectations for a 25 basis point interest rate hike in February. A handful of heavyweight companies are expected to report their latest quarterly earnings this week to complete the puzzle, including Microsoft, IBM, Visa, Tesla and Mastercard.
The central bank is essentially aiming for a “soft landing,” or a controlled decline in the economy, including job vacancies and inflation. However, if companies are struggling with their balance sheets due to the increased cost of capital, profits tend to fall and layoffs will end up being much higher than expected.
On January 23, on-chain analytics firm Glassnode pointed out that long-term bitcoin investors held losing positions more than a year, so they are likely to be more resilient to future adverse price movements.
Let’s take a look at derivatives metrics to better understand how professional traders are faring in the current market conditions.
Stablecoin premiums in Asia are approaching FOMO territory
USD coins (USDC) premium is a good measure of demand from retail cryptocurrency traders in China. It measures the difference between peer-to-peer trades in China and the US dollar.
Excessive buying demand tends to push the indicator above fair value to 103%, and during bear markets, the market supply of the stablecoin is flooded, causing a discount of 4% or more.
Currently, the USDC premium stands at 103.5%, up from 98.7% on January 19, signaling higher demand for stablecoin purchases from Asian investors. The move coincided with Bitcoin’s 11% daily gain on January 20 and suggests mild FOMO from retail traders as the price of BTC neared $23,000.
Professional traders are not particularly enthusiastic after the recent profit
The long-to-short metric excludes externalities that could only impact the stablecoin market. It also collects data from exchange clients’ positions on spot, perpetual and quarterly futures contracts, offering better position information for professional traders.
There are occasional methodological inconsistencies between different exchanges, so readers should watch for changes rather than absolute numbers.
The first trend that can be noticed is that the top traders of Huobi and Binance are extremely skeptical about the recent rise. These whales and market makers have not changed their values from long to short over the past week, which means they are not sure about buying above $20,500, but they are not willing to open short (bearish) positions.
Interestingly, the top traders in OKX were reducing their net longs (bull) until January 20th, but drastically reversed their positions during the final phase of the bull run. Looking at a longer 3-week time frame, their current 1.05 long-to-short ratio remains lower than the 1.18 recorded on January 7th.
Bears are shy and provide an excellent opportunity to run with the bulls
Stablecoin premium of 3.5% in Asia suggests higher appetite from retailers. Additionally, the long-to-short indicator of the top traders shows no increase in demand from shorts, even as Bitcoin reached its highest level since August 2022.
Additionally, $335 million disposal in short (bearish), BTC futures contracts between January 19 and January 20 signal that sellers are continuing to overleverage, setting up the perfect storm for the next leg of the bull run.
Unfortunately, the price of Bitcoin continues to depend heavily on the performance of stock markets. Considering how resilient BTC has been during the uncertainties regarding The bankruptcy of Digital Currency Group (DCG).the odds favor a rise towards $24,000 or $25,000.
The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading step involves risk and readers should do their own research when making decisions.