Bitcoin (BTC) has held the $30,300 resistance level for the past three days after failing to break above $31,000 on June 23. Oddly, this happened at a time when gold prices hit their lowest level in three months, trading at $1,910 on June 22, down from a peak of $2,050 in early May.
Investors are now questioning how solid Bitcoin’s $30,000 support level is. Therefore, analyzing the reasons for the recent price increase is crucial to understanding how traders are positioning themselves in the Bitcoin margin and futures markets.
Why did the price of BTC break through $30,000?
Some analysts have attributed Bitcoin’s recent 11-day rally of 21.5% to BlackRock’s spot bitcoin exchange-traded fund (ETF) filing. But other events may have fueled the cryptocurrency’s gains. For example, on June 26, Hong Kong-based HSBC reportedly launched its first local cryptocurrency service using three listed crypto ETFs.
In addition, the Bitcoin futures fund ProShares Bitcoin Strategy ETF recorded the largest weekly capital inflow in a year, reaching 65 million U.S. dollars, and the asset size exceeded 1 billion U.S. dollars. It is the first ETF linked to Bitcoin in the United States and one of the most popular ETFs with institutional investors.
But more importantly, the regulatory environment for cryptocurrencies in the U.S. may be improving some time after the U.S. Securities and Exchange Commission (SEC) took enforcement actions against exchanges that allegedly operated as unregistered securities brokers.
related: How Security, Education and Regulation Can Mitigate Rising Cryptocurrency Scams
On June 25, Federal Reserve Governor Michelle Bowman said that financial institutions are in a “regulatory gap” when it comes to emerging technologies, including digital assets. Bowman added that policymakers have been relying on “general but non-binding statements,” which leave a lot of uncertainty and impose new operational requirements following major investments.
In this sense, a draft bill in the U.S. House of Representatives seeks to prohibit the SEC from refusing to register digital asset trading platforms as regulated alternative trading systems. The proposed legislation, published on June 2, would allow such companies to offer “stablecoins for digital goods and payments.”
Bitcoin Margin, Futures Show Bullishness
Let’s now look at Bitcoin derivatives indicators to better understand how professional traders are positioned amid improving regulatory views and massive institutional inflows.
Margin markets offer insight into how professional traders are positioned as they allow investors to borrow cryptocurrencies to leverage their positions.
For example, OKX offers a margin lending metric based on the stablecoin/BTC ratio. Traders can increase their exposure by borrowing stablecoins to buy Bitcoin. Bitcoin borrowers, on the other hand, can only bet on a decline in the price of the cryptocurrency.
The chart above shows that the margin borrowing ratio for OKX traders bottomed out at 17 on June 20, but has improved over the past four days. The move suggests that margin bulls are prevailing, as the current 24x ratio favors bullish stablecoin lending.
Still, investors should analyze the long-short indicator of Bitcoin futures, which excludes external factors that may only affect the margin market.
There are occasional methodological differences between exchanges, so readers should focus on changes rather than absolute numbers.
Huobi’s top traders increased their long positions significantly between June 22 and June 24 as the price of Bitcoin broke through the $30,000 resistance level.
On the other hand, top traders in OXK initially increased their short positions on June 22 and June 23, but then revived their positions by adding bullish bets.
Finally, Binance’s top traders started adding to their long positions on June 21 and continued adding to their long positions until June 23.
Bitcoin’s $30,000 Support Shows Strength
Overall, Bitcoin bulls have increased their leveraged long positions using margin and futures markets, buoyed by multiple spot Bitcoin ETF requests, large institutional inflows and positive momentum from a more rational approach by U.S. lawmakers.
The SEC’s approach to enforcement oversight has not drawn support from some Fed governors, and has faced some serious opposition in the U.S. House of Representatives. For example, Rep. Warren Davidson (R-D.) introduced the SEC Stabilization Act, citing “continued abuse of power” and calling for the removal of Gary Gensler’s U.S. Securities and Exchange Commission chairmanship.
Given the favorable outlook for the cryptocurrency, Bitcoin bulls should now have the upper hand and can sustain the $30,000 BTC price support level in the coming weeks.
This article does not contain investment advice or recommendations. Every investment and transaction involves risk, and readers should do their own research when making a decision.