Any dip buyers left? Bulls are largely absent as the total crypto market cap drops to $1.65T

May 6, 2022 Coin Telegraph

Any dip buyers left? Bulls are largely absent as the total crypto market cap drops to .65T

1inch

Weak retail demand and bearish derivatives data reflect a dismal short-term outlook for the crypto market.

The total crypto market capitalization has been trading within a descending channel for 24 days and the $1.65 trillion support was retested on May 6. The drop to $1.65 trillion was followed by Bitcoin (BTC) reaching $35,550, its lowest price in 70 days.

*Total crypto market cap, USD billion. Source: TradingView*

In terms of performance, the aggregate market capitalization of all cryptocurrencies dropped 6% over the past seven days, but this modest correction in the overall market does not represent some mid-capitalization altcoins, which managed to lose 19% or more in the same time frame.

As expected, altcoins suffered the most

In the last seven days, Bitcoin price dropped 6% and Ether (ETH) declined by 3.5%. Meanwhile, altcoins experienced what can only be described as a bloodbath. Below are the top gainers and losers among the 80 largest cryptocurrencies by market capitalization.

*Weekly winners and losers among the top 80 coins. Source: Nomics*

Tron (TRX) rallied 26.9% after TRON DAO rolled out a USDD, a decentralized stablecoin, on May 5. The algorithmic stablecoin is connected to the Ethereum and BNB Chain (BNB) through the BTTC cross-chain protocol.

1inch (1INCH) gained 5.6% after the decentralized exchange governance application became Polygon’s (MATIC) network leader by completing 6 million swaps on the network.

STEPN (GMT), the native token of the popular move-to-earn lifestyle app, declined 35.7%, adjusting after a 70% rally between April 18 and April 28. A similar movement happened to Apecoin (APE) after the token pumped 94% between April 22 and April 28.

The Tether premium flipped negative on May 6

The OKX Tether (USDT) premium gauges China-based retail demand and it measures the difference between the China-based peer-to-peer trades and the United States dollar.

Excessive buying demand puts the indicator above fair value at 100%. On the other hand, Tether’s market offer is flooded during bearish markets, causing a 4% or higher discount.

*Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKX*

The OKX Tether premium peaked at 1.7% on April 30, indicating some excess demand from retail. However, the metric reverted to a 0% premium over the next five days.

More recently, in the early hours of May 6, the OKX Tether premium flipped to -1% negative. Data shows retail sentiment worsened as Bitcoin moved below $37,000.

Futures markets show mixed sentiment

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

*Accumulated 7-day perpetual futures funding rate. Source: Coinglass*

As shown above, the accumulated seven-day funding rate is slightly positive for Bitcoin and Ether. Data indicates slightly higher demand from longs (buyers), but nothing that would force traders to close their positions. For instance, a positive 0.15% weekly rate equals 0.6% per month, thus unlikely to cause harm.

On the other hand, altcoins’ 7-day perpetual futures funding rate was -0.30%. This rate is equivalent to 1.2% per month and indicates higher demand from shorts (sellers).

Signs of weak retail demand as indicated by OKX Tether data and the negative funding rate on altcoins are a signal that traders are unwilling to buy at the critical $1.65 trillion crypto market capitalization. Buyers seem to be waiting for further dips before stepping in, so further price corrections will likely follow.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Spanish Securities Regulator Orders Binance to Stop Offering Cryptocurrency Derivatives

May 6, 2022 Bitcoin.com

Descending channel pattern and weak futures data continue to constrain Ethereum price

May 5, 2022 Coin Telegraph

basis

ETH derivatives metrics and technical analysis point toward further downside for Ethereum price.

Despite bouncing from a 45-day low on April 30, Ether (ETH) price is still stuck in a descending channel and the subsequent 9% gain over the past four days was just enough to get the altcoin to test the pattern's $2,870 resistance.

*Ether/USD price at FTX. Source: TradingView*

Federal Reserve monetary policy continues to be a major influence on crypto prices and this week’s volatility is most likely connected to comments from the FOMC. On May 4, the United States Federal Reserve raised its benchmark overnight interest rate by half a percentage point, which is the biggest hike in 22 years. Although it was a widely expected and unanimous decision, the monetary authority said it would reduce its $9 trillion asset base starting in June.

Chairman Jeremy Powell explained that the Federal Reserve is determined to restore price stability even if that means hurting the economy with lower business investment and household spending. Powell also dismissed the importance of the gross domestic product decline over the first three months of 2022.

Even though Ether's price has corrected by 14% over the course of a month, the network's value locked in smart contracts (TVL) increased by 7% in 30 days to 25.2 million Ether, according to data from DefiLlama. For this reason, it is worth exploring if the price drop below $3,000 impacted derivatives traders' sentiment.

ETH futures show traders are still bearish

To understand whether the market has flipped bearish, traders must analyze the Ether futures contracts' premium, also known as the basis rate. Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.

One can gauge the market sentiment by measuring the expense gap between futures and the regular spot market.

*Ether 3-month futures premium. Source: Laevitas.ch*

To compensate for traders' deposits until the trade settles, futures should trade at a 5% to 12% annualized premium in healthy markets. Yet, as displayed above, Ether's annualized premium has been below such a threshold since April 5.

Despite a slight improvement over the past 24 hours, the current 3.5% basis rate is usually deemed bearish as it signals a lack of demand for leverage buyers.

Sentiment in options markets worsened

To exclude externalities specific to the futures instrument, traders should also analyze the options markets. For instance, the 25% delta skew compares similar call (buy) and put (sell) options.

This metric will turn positive when fear is prevalent because the protective put options premium is higher than similar risk call options. The opposite holds when greed is prevalent, causing the 25% delta skew indicator to shift to the negative area.

*Ether 30-day options 25% delta skew. Source: Laevitas.ch*

A 25% skew indicator range between negative 8% and positive 8% is usually considered a neutral area. However, the metric has been above such a threshold since April 16 and is currently at 14%.

With option traders paying higher premiums for downside protection, it is safe to conclude that the sentiment has worsened in the past 30 days. Presently, there is a growing sense of bearish sentiment in the market.

Of course, none of this data can predict if Ether will continue to respect the descending channel, which currently holds a $2,950 resistance. Still, considering the current derivatives data, there is reason to believe that an eventual pump above $3,000 will likely be short-lived.

3 key metrics signal Terra (LUNA) price is preparing for a recovery

May 4, 2022 Coin Telegraph

Anchor

LUNA price is far from its all-time high but three key metrics signal that the altcoin could be preparing to rally.

Terra (LUNA) price lost 31% over the past four weeks, erasing all of the gains accrued year-to-date and even though the token continues to outperform the broader cryptocurrency market by 20%, Terra is struggling to hold above the $85 support.

Previously, a few bullish catalysts were Terra’s USD (UST) stablecoin flipping Binance USD (BUSD) to become the third-largest stablecoin on April 18 and the April 26 announcement that Fireblocks, a digital asset custody platform had seen institutional clients invest over $250 million into the Terra decentralized finance (DeFi) ecosystem.

This positive newsflow was not enough to instill confidence in Terra investors and there were also a few changes that might have partially subdued the continuous inflow of deposits on the network.

*Luna/USD at Binance (blue) vs. Total crypto capitalization (orange). Source: TradingView*

For instance, on May 1, Anchor Protocol, Terra’s largest DeFi application by deposits, introduced a semi-dynamic adjustment to its previously fixed 20% annualized percentage yield (APY). The Anchor earn rate was cut to 18% and going forward it will be reviewed monthly.

TVL grew, but Dapp transactions declined

Terra's main decentralized application metric increased by 41% over the past month as the network's total value locked (TVL) hit an all-time high at 254 million LUNA.

*Terra network Total Value Locked, LUNA. Source: DefiLlama*

Notice how Terra's DApp deposits saw a 77% jump in 2022, reaching the equivalent of $21.2 billion. As a comparison, Binance Chain's TVL currently stands at $9.8 billion, a 9% increase in BNB terms year-to-date. Avalanche, another DApp scaling solution competitor, saw a 28% TVL increase in AVAX terms to a $7.9 billion value.

To confirm whether DApp use has effectively increased, investors should also analyze the transaction count within the ecosystem.

*Anchor transaction count. Source: Terrasco.pe*

Anchor holds a $16.6 billion TVL, equivalent to 78% of Terra’s decentralized application deposits. The protocol averaged 70,150 transactions per day last week, which is 15% below the levels seen in early April.

*Astroport transaction count. Source: Terrasco.pe*

Astroport, an automated market-making project, holds the number two position in TVL terms within Terra’s ecosystem, with $1.6 billion worth of deposits. Notably, last week, an average of 50,650 transactions per day took place, a 30% decline from the previous month.

*Terrraswap transaction count. Source: Terrasco.pe*

According to Terrascope data, the Terraswap decentralized asset liquidity application had 31,400 average daily transactions over the past week. The number is similar to the levels seen in early April.

Derivatives data show no sign of distress

*Solana futures aggregate open interest. Source: Coinglass*

The reduced use of Terra DApps does not seem to have impacted derivatives traders' appetite.

The above chart shows LUNA futures contracts open interest holding steady at $706 million. This data is critical because a smaller number of futures contracts could limit arbitrage desks and institutional investors’ activity.

Furthermore, Terra has the third-largest open interest behind Bitcoin (BTC) and Ether (ETH). As a comparison, Solana (SOL) and XRP futures contracts hold a $660 million open interest.

LUNA Fundamentals are still solid

Even though it seems impossible to pinpoint the cause of LUNA's price drop, the decrease in the network's decentralized apps use can partially explain the movement. However, the increase in its smart contract deposits, as shown by the TVL increase and sound interest from derivatives traders point to a price recovery in the near-term.

The data suggests that Terra holders are not concerned about the 31% price correction and are more focused on the ecosystem's growth versus its competitors. As long as these metrics remain healthy, investors are not likely to sell at a loss.

3 reasons why Bitcoin price is clinging to $38,000

May 3, 2022 Coin Telegraph

3 reasons why Bitcoin price is clinging to ,000

basis

BTC is in a lengthy downtrend but three key price metrics explain why traders are confident that the $38,000 level will hold.

Bitcoin (BTC) has been unable to break from the 26-day-long descending channel. Investors are uncomfortable holding volatile assets after the United States Federal Reserve pledged to reduce its $9 trillion balance sheet.

While inflation has been surging worldwide, the first signs of an economic downturn showed as the United Kingdom's retail sales fell 1.4% in March. Moreover, Japan's industrial production dropped 1.7% in March. Lastly, the U.S. gross domestic product fell 1.4% in the first quarter of 2022.I

*Bitcoin/USD price at FTX. Source: TradingView*

This bearish macroeconomic scenario can partially explain why Bitcoin has been on a downtrend since early April. Still, one needs to analyze how professional traders position themselves and derivatives markets to provide some excellent indicators.

The Bitcoin futures premium is is muted

To understand whether the current bearish trend reflects top traders' sentiment, one should analyze Bitcoin's futures contracts premium, which is also known as a "basis."

Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges. A bearish market sentiment causes the three-month futures contract to trade at a 5% or lower annualized premium (basis).

On the other hand, a neutral market should present a 5% to 12% basis, reflecting market participants' unwillingness to lock in Bitcoin for cheap until the trade settles.

*Bitcoin 3-month futures premium. Source: laevitas.ch*

The above chart shows that Bitcoin's futures premium has been below 5% since April 6, indicating that futures market participants are reluctant to open leverage long (buy) positions.

Options traders remain in the "fear" zone

To exclude externalities specific to the futures instrument, traders should also analyze the options markets. The 25% delta skew compares equivalent call (buy) and put (sell) options. The indicator will turn positive when "fear" is prevalent because the protective put options premium is higher than the call options.

The opposite holds when market makers are bullish, causing the 25% delta skew to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.

*Deribit Bitcoin 30-day options 25% delta skew. Source: laevitas.ch*

The above chart shows that Bitcoin option traders have been signaling "fear" since April 8, just as BTC broke below $42,500 following a 10% drop in four days. Of course, such a metric could be reflecting the 16% negative BTC price performance over the past month, so not exactly a surprise.

Margin markets sustain its optimism

Margin trading allows investors to borrow cryptocurrency and leverage their trading position, thus potentially increasing returns. For example, a trader can buy cryptocurrencies by borrowing Tether (USDT) to increase their exposure.

On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price decline. Unlike futures contracts, the balance between margin longs and shorts isn't always matched.

*OKEx USDT/BTC margin lending ratio. Source: OKEx*

The above chart shows that traders have been borrowing more Bitcoin recently, as the ratio decreased from 20 on April 30 to the current 12.5. The higher the indicator, the more confident professional traders are with Bitcoin's price.

Despite some additional Bitcoin borrowing activity aimed at betting on the price downturn, margin traders remain mostly optimistic according to the USDT/BTC lending ratio.

Bitcoin traders fear further correction as macroeconomic indicators deteriorate as investors expect a potential crisis impact on riskier markets. However, there are no signs of leverage short (negative) bets using margin or futures, meaning sellers lack conviction at $38,000.

Derivatives, Spot Markets, Dex Swaps — 30 Day Crypto Trade Volumes Slipped Across the Board Last Month

May 2, 2022 Bitcoin.com

2 key metrics point toward further downside for the entire crypto market

April 29, 2022 Coin Telegraph

apecoin

Futures data and decreased demand for Tether signal that the crypto market is set for another round of pain.

The total crypto market capitalization has been holding a slightly ascending trend for the past 3 months and the $1.75 trillion support was most recently tested on April 27 as Bitcoin (BTC) bounced at $38,000 and Ether (ETH) at $2,800 on April 27.

The crypto market’s aggregate capitalization showed a 3.5% decrease in the last 7 days and notable losers were a 18.8% loss from XRP, a 10.2% loss from Cardano (ADA), and 9.7% drop in Polkadot (DOT) price.

Analyzing a broader range of altcoins provides a more balanced picture, that includes 25% gains from some gaming and Metaverse projects in the same time period.

Apecoin (APE) rallied 44% due to the upcoming Otherside metaverse land auction scheduled for April 30. The Otherside is being developed by Yuga Labs, Animoca Brands and the Bored Ape Yacht Club NFT team and NFT investors have high expectations for the project.

The native tokens of move-to-earn lifestyle app STEPN (GMT) rallied 28% after the U.S.-based crypto exchange Coinbase announced plans to list the token.

Nexo gained 15% after crypto and derivatives exchange Binance announced its listing on April 29 and Nexo also revealed plans to issue a credit card that accepts crypto as collateral rather than selling the holders’ assets.

Zilliqa (ZIL) price has been adjusting after the token pumped 380% in late March and this follows the project’s March 25 announcement of a metaverse service that will utilize Nvidia technology.

Meanwhile, data from DappRadar shows that play-to-earn unicorn, Axie Infinity (AXS) plunged to its lowest level in 9 months after the number of users and transactions declined by 15% over the last 30.

The Tether premium shows lack of demand from buyers

The OKX Tether (USDT) premium gauges China-based retail demand and it measures the difference between the China-based peer-to-peer trades and the United States dollar.

Excessive buying demand puts the indicator above fair value at 100%. On the other hand, Tether’s market offer is flooded during bearish markets, causing a 4% or higher discount.

The OKX Tether premium peaked at 2% on April 28, its highest level in 2022. The movement coincided with Bitcoin breaking above $40,000, but its price reverted later that day. Currently, the Tether premium stands at 0%, signaling a neutral sentiment from retail traders.

Futures markets show mixed sentiment

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

*Accumulated 7-day perpetual futures funding rate on April 29. Source: Coinglass*

As shown above, the accumulated seven-day funding rate is slightly positive for Bitcoin and Ether. Data indicates slightly higher demand from longs (buyers), but nothing that would force traders to close their positions. For instance, Luna’s positive 0.15% weekly rate equals 0.6% per month, which should not concern most futures traders.

The absence of the Tether premium in Asia and the flattish perpetual contract premiums signal a lack of demand from retail traders right as the total crypto market capitalization struggles to sustain the $1.75 trillion support.

Synthetix (SNX) rallies in anticipation of L2 Curve Wars and Optimism airdrop announcement

April 27, 2022 Coin Telegraph

Altcoin Watch

SNX price got a boost after the project geared up for participation in the L2 Curve Wars and Optimism airdrop hunters engaged with the protocol.

Layer-two (L2) solutions for the Ethereum (ETH) network have grown in prominence over the last year because of the need for scalable networks that offer low-fee transactions and led to numerous projects that built cross-chain bridges with competing blockchain networks.

One project that has benefitted from the growth of the L2 scaling solutions is Synthetix (SNX), a decentralized finance (DeFi) protocol that enables the creation of synthetic assets and offers exposure to derivatives and futures trading on blockchain.

Data from Cointelegraph Markets Pro and TradingView shows that since hitting a low of $4.44 on April 11, the price of SNX rallied 52.6% to hit a daily high at $6.78 on April 26 before a widespread market downturn dropped it back down to $5.90.

*SNX/USDT 1-day chart. Source: TradingView*

While the majority of the market is down, there are potential catalysts for SNX price to see further appreciation.

Launch on Optimism

One of the biggest developments for the Synthetix protocol was its launch on Optimism, a L2 network which is making waves this week thanks to an airdrop announcement. SNX staking began on Jan. 16 and as the network grows, speculators are giddy at the prospect of future airdrops and staking incentives.

Most recently, Synthetix used its launch on Optimism to get more involved in the “Curve Wars” and currently, it is offering the highest bribe to get veCRV voters to incentivize voting for the sUSD Curve pool.

Synthetix has also partnered with Lyra Finance (LYRA) to offer 12,000 SNX and 50,000 LYRA per week as an added incentive for veCRV voters.

L2 airdrop season could be a catalyst for SNX

A second reason the price of SNX has the potential to see further appreciation is traders' expectation that an airdrop season for L2 protocols could occur.

There has been a significant amount of speculation that Optimism and Arbitrum, two of the most popular L2 networks in the crypto ecosystem, would eventually airdrop their protocol tokens to early adopters of the networks.

This speculation became reality after Optimism released the initial details of the Optimism Collective, a “large-scale experiment in digital democratic governance” that is “built to drive rapid and sustainable growth of a decentralized ecosystem.”

Along with the launch of the Optimism Collective comes the launch of the OP governance token, of which 5% of the initial supply will be airdropped to early adopters. For those who did not qualify for the first airdrop round, there is still a chance to qualify for future airdrops by being active on the network using protocols like Synthetix.

With Synthetix offering futures trading on Optimism, the protocol could benefit from users seeking ways to be active on the network and this could increase demand for SNX.

On top of the potential to receive an OP airdrop, SNX holers have also been lured to Optimism by the 81% staking rewards currently being offered by the protocol.

Climbing user base and volume transacted

Further evidence of the rising popularity of Synthetix can be found looking at the platform's metrics on Optimism, which have been steadily increasing for the past month according to data from Dune Analytics.

*Synthetix protocol metrics. Source: Dune Analytics*

As shown in the graphic above, the number of unique traders on the protocol has been climbing since launching futures trading in mid-March and the protocol has handled nearly $1.59 billion in total volume.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for SNX on April 23, prior to the recent price rise.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

*VORTECS™ Score (green) vs. SNX price. Source:* *Cointelegraph Markets Pro*

As seen in the chart above, the VORTECS™ Score for SNX climbed into the green zone and hit a high of 77 on April 23, around 39 hours before the price spiked 28% over the next day.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum on-chain data hints at further downside for ETH price

April 26, 2022 Coin Telegraph

Coin Telegraph

An assortment of on-chain and derivatives data signal that ETH price is unlikely to rally above $3,500 any time soon.

Analyzing Ether's (ETH) current price chart paints a bearish picture which is largely justified by the 11% drop over the past month, but other traditional finance assets faced more extreme price corrections in the same period. The Invesco China Technology ETF ($CQQ) is down 31% and the Russell 2000 declined by 8%.

*Ether price at FTX, in USD. Source: TradingView*

Currently, traders fear that losing the descending channel support at $2,850 could lead to a stronger price downturn, but this largely depends on how derivatives traders are positioned along with the Ethereum network's on-chain metrics.

According to Defi Llama, the Ethereum network's total value locked (TVL) flattened in the last 30 days at 27 million Ether. TVL measures the number of coins deposited on smart contracts, including decentralized finance (DeFi), NFT marketplaces, gaming and high-risk applications.

The Ethereum network's average transaction fee increased to $13 after bottoming at $11.50 on April 20 but one should analyze whether this reflects decreased use of decentralized applications (DApps) or merely if it is users benefiting from layer-2 scaling solutions.

Ether's futures premium tilts toward bears

Traders use Ether futures market data to understand how professional traders are positioned, but unlike the standard perpetual futures, the quarterly contracts are whales and market makers' preferred instruments because they can avoid the fluctuating funding rate.

The basis indicator measures the difference between longer-term futures contracts and the current spot market levels. In neutral markets, the Ether futures annualized premium should run between 5% to 12% to compensate traders for "locking in" the money until the contract expiry.

*Ether 3-month futures annualized premium. Source: Laevitas.ch*

The current 2% Ether futures basis clearly shows the lack of demand for leverage buyers. Although not precisely a backwardation (negative premium), an annualized futures premium below 5% is usually deemed bearish.

This data tells us that pro traders have been neutral-to-bearish in the past couple months, but to exclude externalities that might have influenced derivatives data, one should analyze the Ethereum network on-chain data. For example, monitoring the network use tells us whether actual use cases support the demand for Ether.

On-chain metrics are sluggish

Measuring the number of active addresses on the network provides a quick and reliable indicator of effective use. Of course, this metric could be misguided by the increasing adoption of layer-2 solutions, but it works as a starting point.

*7-day average of active addresses on Ethereum. Source: CoinMetrics*

The current 584,477 daily active addresses average is a 4% decrease from 30 days ago and nowhere near the 675,117 seen in November 2021. Thus, data shows that Ether token transactions are not showing signs of growth, at least on the primary layer.

Traders should rely on DApp usage indicators, but avoid exclusive focus on the TVL because that metric is heavily concentrated on DeFi applications. Gauging the number of active addresses provides a broader view.

*Ethereum network 30-day DApps activity. Source: DappRadar*

Ethereum DApps active addresses have flatlined over the past 30 days. Overall, the data is slightly disappointing, considering competing chains such as Solana saw a 34% active addresses increase.

Unless there’s decent growth in Ether transactions and DApp usage, the $2,850 descending support channel resistance might not hold, triggering a deeper short-term price correction.

Bitcoin bears tighten their grip on BTC now that $40K is the new resistance level

April 25, 2022 Coin Telegraph

Bitcoin bears tighten their grip on BTC now that K is the new resistance level

bitcoin options

Mounting concerns about the state of the global economy and traders' risk-off sentiment continue to weigh on Bitcoin price.

Bitcoin (BTC) remains below $40,000 for the third consecutive day and the most likely source of the volatility is the worsening condition of traditional markets. For instance, the S&P 500 is down 5% since April 20 WTI crude price dropped 9.5% in seven days, erasing all of the gains accrued since March 1.

Meanwhile, China has been struggling to contain its worst outbreak of Covid-19 despite strict lockdowns in Shanghai and according to Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs, "it's no surprise, and it makes all sorts of logical sense that the market should be concerned about the Covid situation because that clearly is impacting economic activity."

Investors were driven away from risky assets

As the global macroeconomic scenario deteriorated, investors took profits on riskier assets, causing the U.S. Dollar Index (DXY) to reach its highest level in 25 months at 101.8.

The cryptocurrency mining business also faced regulatory uncertainties after the United States House of Representatives member Jared Huffman and 22 other lawmakers requested the Environmental Protection Agency to assess whether crypto mining firms were potentially violating environmental statutes on April 21.

Despite Bitcoin's 4-day price 10% correction to $38,200 on April 25, most holders choose to stay hands-off, as confirmed by on-chain data from Glassnode. The proportion of the supply dormant for at least 12-months is now at all-time highs at 64%. Thus, it is worth exploring whether the recent price rejection impacted the mood of derivatives traders.

Derivatives markets show bearish Bitcoin traders

To understand whether the market has flipped bearish, traders must look at the Bitcoin futures' premium (basis). Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.

A trader can gauge the market’s bullishness level by measuring the expense gap between futures and the regular spot market.

*Bitcoin 3-month futures basis rate. Source: Laevitas.ch*

Futures should trade at a 5% to 12% annualized premium in healthy markets. Yet, as displayed above, Bitcoin's basis moved below such a threshold on April 6 and is currently at 2%. This means futures markets have been pricing in bearish momentum for the past couple of weeks.

To exclude externalities specific to the futures instrument, traders should also analyze the options markets. For example, the 25% delta skew compares similar call (buy) and put (sell) options.

This metric will turn positive when fear prevails because the protective put options premium is higher than similar risk call options. Meanwhile, the opposite holds when greed emerges, causing the 25% delta skew indicator to shift to the negative area.

*Bitcoin 30-day options 25% delta skew. Source: Laevitas.ch*

If option investors feared a price crash, the skew indicator would move above 8%. On the other hand, generalized excitement reflects a negative 8% skew. The metric shifted bearish on April 7 and has since kept above the threshold level.

Traders will resist eventual price pumps

According to derivatives indicators, it is safe to say that Bitcoin pro traders became more uncomfortable as Bitcoin tested the $39,000 support.

Of course, none of the data can predict whether Bitcoin will continue to downtrend, but considering the current data, traders are overcharging for downside protection. Consequently, any surprise price recovery will be questioned.

futures

As expected, altcoins suffered the most

The Tether premium flipped negative on May 6

Futures markets show mixed sentiment

ETH futures show traders are still bearish

Sentiment in options markets worsened

TVL grew, but Dapp transactions declined

Derivatives data show no sign of distress

LUNA Fundamentals are still solid

The Bitcoin futures premium is is muted

Options traders remain in the "fear" zone

Margin markets sustain its optimism

The Tether premium shows lack of demand from buyers

Futures markets show mixed sentiment

Launch on Optimism

L2 airdrop season could be a catalyst for SNX

Climbing user base and volume transacted

Ether's futures premium tilts toward bears

On-chain metrics are sluggish

Investors were driven away from risky assets

Derivatives markets show bearish Bitcoin traders

Traders will resist eventual price pumps

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