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Critical Level for Bitcoin $ 46,000



Bitcoin and altcoins took heavy losses on December 13, but data from derivatives exchanges shows that traders are looking at the $ 46,000 level as an indicator of whether the market is holding up well.


December 13th will likely go down in history as a "Bloody Monday" because Bitcoin ( BTC ) prices fell below the support at $ 47,000 and altcoin prices fell as much as 25 percent in a short period of time. 


Analysts have stated that the 8.5 percent Bitcoin correction is directly related to the Federal Open Market Committee (FOMC) meeting, which begins December 15.


Investors fear that the US Federal Reserve will eventually start tapering. Simply put, that means the Federal Reserve's bond buybacks will be reduced. A change in current monetary policy could adversely affect riskier assets. This fear can neither be confirmed nor refuted, but Bitcoin has gained 67 percent since the beginning of the year up to December 12th. It therefore makes sense for investors to protect this growth from the great uncertainty in the market. That could have triggered the current correction in BTC.



Bitcoin price fell 8.2 percent in the past week, but it has still outperformed the rest of the altcoin market. It has been different in the past 50 days, as Bitcoin's market share has fallen from 47.5 percent to 42 percent. Investors could have simply switched to Bitcoin because the risk is relatively low compared to altcoins.


Tether percent cheaper

OKEx's premium for tether ( USDT ) measures the difference between peer-to-peer (P2P) trades in China and the official US dollar currency. A value above 100 percent indicates excessive demand for investments in cryptocurrencies. A minus of 5 percent, on the other hand, usually means that there are many sales.


The tether indicator hit a low of 96 percent on December 13, making it slightly bearish. But since the total market capitalization of all cryptocurrencies has declined 10 percent, that's not alarming. However, it has been more than two months since this indicator climbed above 100 percent. This suggests a pessimistic sentiment among traders in China.



The fact that liquidations totaled just $ 400 million in 24 hours is further evidence that the December 13th slump had little impact on investor sentiment.


Also, only $ 300 million in so-called long leverage was forcibly terminated because margins were insufficient. That number seems small compared to the December 3 slump when that number was $ 2.1 billion.


No excessive demand from the Bitcoin bears

Another indication that this slump did not have a major impact is the perpetual futures. There's an embedded course here and a fee is typically charged every 8 hours to offset the risk of the exchange.



A positive funding rate suggests that long positions (buyers) require greater leverage. The opposite is true when short sellers need additional leverage. This leads to the financing rate becoming negative.


Despite the fact that most cryptocurrencies posted significant losses on December 13th, the overall market structure has held up well. Had there been an excessive opening of short positions betting on a Bitcoin price drop below $ 46,000, the funding rate for perpetual futures would have fallen below 0.05 percent.


Tether's drop of 4 percent in Chinese markets, $ 300 million in liquidations of long contracts, and a neutral funding rate are not signs of a bear market. Unless these key indicators change significantly, there is no reason to expect Bitcoin to be worth $ 42,000 or less.



The views and opinions expressed are those of the author only and do not necessarily reflect the views of the site. Every investment and trading step carries a risk. Do your research well before making a decision.

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