Bitcoin’s price has been volatile since hitting a high of $52,950 on Sept. 7 and a low of $42,800 just two hours later.
More recently, the $45,000 support held for a couple of days was rigorously tested, triggering a $3,400 up and down-swing on Sept. 13.
Since the liquidation of $3.54 billion in futures contracts on Sept. 7, there is little reason to suspect that shorts traders betting on a price decrease have had the upper hand.
MicroStrategy’s announcement on Sept. 13 that it had added over 5,050 Bitcoin at an average price of $48,099 was insufficient to instil confidence. The cryptocurrency’s price remained largely unchanged, near $44,200.
While the implications of shorts may be realized, it is more plausible that governance worries will continue to suppress markets, as the US Treasury Department has reportedly addressed potential regulation for private stablecoins, according to Reuters.
Bitcoin quarterly futures are the favoured securities of sharks and arbitrage desks since they do not have a changing funding rate.
However, their date of settlement and cost difference from spot markets may appear complex to ordinary traders.
When traders choose everlasting contracts (inverse swaps), derivatives exchanges impose a fee every eight hours based on which party requires the most leverage.
Meanwhile, fixed-date expiration contracts generally trade at a premium to ordinary spot market exchanges to compensate for the delayed settlement.
Despite the ongoing market correction, there should be no denying that investors are neutral to bullish, at least according to futures contracts. Of course, traders should keep an eye on key resistance levels, but $44,000 has so far held fast.