Bitcoin is flirting with $40K, but derivatives data remains bullish.

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Bitcoin is approaching the $40,000 mark, but derivatives statistics show traders remain neutral to optimistic.

Bitcoin (BTC) is experiencing extreme volatility after falling from a high of $52,950 on Sept. 7 to a low of $42,800 just two hours later. More recently, despite being intensively tested, the $45,000 support held for a couple of days, triggering a $3,400 up- and down-swing on Sept. 13.

Shorts – traders betting on a price drop — have had the upper hand since the liquidation of $3.54 billion in long (buyers) futures contracts on Sept. 7.

MicroStrategy’s disclosure on September 13 that it has added over 5,050 Bitcoin at an average price of $48,099 was insufficient to restore trust, and the cryptocurrency’s price remained constant near $44,200.

While the impact of shorts may be being felt, it’s more likely that regulatory concerns continue to suppress markets, as the United States Treasury Department has reportedly discussed potential regulation for private stablecoins, as reported by Reuters on Sept. 10.

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The regulators’ increased attention comes as the stablecoin market capitalisation has risen from $37 billion in January to $125 billion today. Furthermore, both Visa and Mastercard have expressed a renewed interest in stablecoin-related solutions.

Regardless of the cause of the current price decline, futures contracts have been exhibiting optimistic sentiment since August 7.

Professional traders have been bullish for the past five weeks

Bitcoin quarterly futures are the favourite instruments of whales and arbitrage desks since they do not have a variable funding rate. However, given to their settlement date and price difference from spot markets, they may appear difficult to retail traders.

When traders choose everlasting contracts (inverse swaps), derivatives exchanges levy a fee every eight hours based on which party requires the most leverage. Meanwhile, to compensate for the delayed settlement, fixed-date expiry contracts often trade at a premium to conventional spot market exchanges.

 

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