The crypto market is showing signs of weakness as Bitcoin’s price dips and a new regulatory framework looms in the United States. However, some experts are hopeful that it will quickly rebound if not for the financial crisis itself but for future regulation on blockchain technology.
Bitcoin is fighting to hold $29,000 as fear of regulation and Terra’s UST implosion hit crypto hard. Read more in detail here: bitcoin price prediction 2025.
The price of Bitcoin (BTC) initially rebounded from its recent low of $29,000, but market sentiment remains mostly negative after a 25% price decline in five days. The crypto “Fear and Greed Index,” which takes into account volatility, volume, social metrics, Bitcoin dominance, and Google trends data, has now dropped to its lowest level since March 2020, and there seems to be nothing buffering the market from further decline.
Fear and Greed Index in Crypto Alternative.me is the source of this information.
Markets are still being weighed down by regulations.
The greatest danger to markets is regulation, and it’s evident that investors are avoiding high-volatility assets. Earlier this week, at a Senate Banking Committee hearing, US Secretary of the Treasury Janet Yellen called for a regulatory framework for stablecoins, mentioning the TerraUSD (UST) stablecoin, which has fallen below Regulation is still the main threat weighing on markets and it’s clear that investors are taking a risk-off approach to high volatility assets. Earlier this week, during a hearing of the Senate Banking Committee, United States Secretary of the Treasury Janet Yellen called for a regulatory framework on stablecoins and specifically addressed the TerraUSD (UST) stablecoin plunging below $0.70..70.
On May 10, the United Kingdom proposed two proposals aimed at regulating cryptocurrency. The Financial Services and Markets Bill and the Economic Crime and Corporate Transparency Bill both seek to boost the country’s financial services sector, including “safe cryptocurrency adoption.”
In the meanwhile, Google searches for “Bitcoin” and “crypto” are reaching their lowest point in 17 months.
“Bitcoin” and “Cryptos” are searched globally. Google Trends (source)
This signal may explain why Bitcoin is down 56% from its all-time high of $69,000 due to poor public interest, but let’s look at how professional traders are positioned in derivatives markets.
The absence of buyer demand is confirmed by long-to-short statistics.
The long-to-short net ratio of the best traders examines holdings on spot, perpetual, and futures contracts. It provides a better grasp of whether experienced traders are bullish or bearish from an analytical standpoint.
Because there are often methodological differences between various exchanges, observers should keep an eye on changes rather than absolute data.
Bitcoin long-to-short ratio of leading exchange traders. Credit: Coinglass
Bitcoin may have risen 4% from its low of $29,000 on May 11 according to the long-to-short ratio, but experienced traders have not increased their optimistic bets. The top traders’ ratio on OKX, for example, has dropped from 1.20 to 1.00.
Furthermore, Binance data suggests that those traders are constant around 1.10, while Huobi data shows a similar pattern, with the top traders’ long-to-short ratio at 0.97. Despite the 5 percent price rebound, there is little demand for leverage buys among professional investors, according to data.
CME futures traders have changed their tune.
Traders should look to the CME’s Bitcoin futures contracts premium to see whether the crypto market structure has deteriorated further. Longer-term futures contracts are compared to the usual spot market pricing.
These fixed-calendar contracts frequently trade at a modest premium, suggesting that sellers are asking for more money in order to delay settlement. As a consequence, in healthy markets, one-month futures should trade at a 0.5 percent to 1% premium, a phenomenon known as contango.
When that indicator fades or goes negative (backwardation), it signals the presence of bearish emotion.
At FTX, BTC CME 1-month forward contract vs. BTC/USD TradingView (source)
The indicator entered backwardation on May 10, marking the lowest level in two months at a negative 0.4 percent premium, as seen in the chart above.
Institutional traders are trading below the “neutral” barrier, as defined by the futures’ basis, indicating the emergence of a negative market structure.
Furthermore, despite the swift 4 percent price rebound from the $29,000 mark, top traders’ long-to-short data reveals a lack of appetite, and the fact that BTC currently trades around the same level is also troubling. The chances of additional market correction remain strong until the derivatives indicators improve.
The author’s thoughts and opinions are purely his or her own and do not necessarily represent those of Cointelegraph. Every investing and trading decision is fraught with danger. When making a choice, you should do your own research.
The “how to buy bitcoin” is a guide for those who want to know how to buy Bitcoin. It includes information on the different ways you can purchase the cryptocurrency and where to find it.
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