BTC consolidates $17K while S&P 500 loses 1.5%

Key points: 

• BTC keeps above $16,800 for the past 5 days, S&P 500 fell 1.5% on Dec. 5 after a stronger-than-expected November ISM service release.
• Currently, USDC is trading at a 100.5% premium, up from 103.5% on Nov. 28, so despite failing to break resistance at $17,500, there is no panic selling among Asian retail investors.
• However, this data should not be viewed as optimistic, as recent buying pressure on USDC at a premium of up to 4% suggests that traders have taken refuge in stablecoins.
• Professional traders kept their leveraged long positions unchanged based on long-short metrics despite Bitcoin’s 5.5% gain in seven days.
• The bearish sentiment prevailed, but even with Bitcoin flat and the S&P 500 down 1.5%, the bears became less confident.

Bitcoin bulls regained some control on Nov. 30 and have managed to keep BTC above $16,800 for the past 5 days. While that level is below traders' expectations of a $19,000 to $20,000 target, the 8.6% surge since the Nov. 21 low of $15,500 provides ample protection from any negative price surprises.

One such example was U.S. stocks, which fell 1.5% on Dec. 5 after a stronger-than-expected November ISM service release stoked fears that the Federal Reserve would raise interest rates further. At the September meeting, Fed Chairman Jerome Powell noted that the point of leaving rates unchanged "has to be a little bit higher."

For now, macro headwinds remain headwinds and are likely to persist until investors gain more clarity on the job market and the strength of the U.S. dollar (DXY) index.

Excessively high levels reduce earnings for exporters and companies that depend on non-U.S. revenues. The dollar's weakness also points to a lack of confidence in the U.S. Treasury's ability to manage its $31.4 trillion in debt.

The fallout from the 2022 bear market continues to make waves as Bybit exchange decides to conduct a second round of layoffs on December 4th. Bybit co-founder and CEO Zhou Ben announced that the company will lay off 30% of its employees. Before that, the company had grown to more than 2,000 employees in two years.

Let's take a look at derivatives indicators to better understand where professional traders are positioned in current market conditions.

Demand for stablecoins in Asia falls after peaking at 4%

The dollar token premium is a good gauge of demand from Chinese cryptocurrency retailers. It measures the difference between China-based peer-to-peer transactions and the U.S. dollar.

Excessive buying demand tends to push the metric 100% above fair value, and during bear markets, the stablecoin market is oversupplied, leading to discounts of 4% or more.

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

Currently, USDC is trading at a 100.5% premium, up from 103.5% on Nov. 28, so despite failing to break resistance at $17,500, there is no panic selling among Asian retail investors.

However, this data should not be viewed as optimistic, as recent buying pressure on USDC at a premium of up to 4% suggests that traders have taken refuge in stablecoins.

Leveraged buyers ignore the recent surge to $17,400

The long-short indicator does not include external factors that may only affect the stablecoin market. It also collects data from live exchange clients' positions, and perpetual and quarterly futures contracts, providing better information on how professional traders are positioned.

There are occasional differences in methodology between different exchanges, so readers should focus on changes rather than absolute numbers.

Bitcoin Long to Short Ratio. Source - Coinglass

Professional traders kept their leveraged long positions unchanged based on long-short metrics despite Bitcoin’s 5.5% gain in seven days.

Binance Trader’s ratio increased from 1.05 on November 28 to the current 1.09. Meanwhile, Huobi’s long-short ratio has declined slightly, with the metric moving from 1.07 to 1.03 in the seven days to Dec. 5.

On the OKX exchange, the indicator rose from 0.98 on November 28 to the current 1.01. So, on average, traders maintained leverage throughout the week, which is a disappointing figure considering the gains.

Support at $16.8 is strengthening, but derivatives show slight buying demand

The two derivatives indicators — stablecoin premiums and top traders long-short — suggest that leveraged buyers failed to support Bitcoin’s rally to $17,400 on Dec. 5.

More bullish sentiment would drive Asian stablecoin premiums above 3% and long-short ratios compared to the previous week. Recent data from both markets has reduced the chances of a sustained rally above $17,400. Still, a 3.5% drop toward $16,500 support should be of little concern, as neither indicator shows signs that leveraged bearish bets are forming.

In short, the bearish sentiment prevailed, but even with Bitcoin flat and the S&P 500 down 1.5%, the bears became less confident.