Bitcoin traders cross fingers in hopes that a positive Fed meeting triggers a run to $18K

bitcoin (BTC) failed to break above the $17,250 resistance on Dec. 11 and subsequently faced a 2.2% correction. More importantly, the last daily close above this level was more than 30 days ago, which bolsters the thesis of size sellers near the $330 billion market cap mark.

Interestingly, this valuation level is slightly behind Palladium, the 23rd most valuable traded asset in the world with a capitalization of $342 billion. So, on the one hand, Bitcoin bulls have some reason to celebrate as the price rallied 10% from the $15,500 low on Nov. 21, but the bears still have the upper hand on a longer time frame as BTC is down 64% year to date. .

Two events are expected to determine the fate of traditional financial investors, as the US Consumer Price Index is due on December 2. December 13 and US Federal Reserve Chairman Jerome Powell will announce the size of the next interest rate hike on December 14. Investors will also be eagerly awaiting Powell's press conference.

In cryptocurrency markets, there is some slight relief coming from the exchanges' test of reserves, though several analysts have criticized the limited details in each report.

Derivatives exchange Bybit was the latest addition to the transparency initiative, allow users to self-verify their deposits using Merkle Trees, according to a Dec. 12 announcement.

However, regulatory risks remain high after crypto-skeptic Democratic US Senator Jon Tester boldly asserted that he sees "there is no reason why" crypto should exist. During a December 11 appearance on NBC, Tester argued that cryptocurrencies have no real value, so regulating the sector would give it legitimacy.

Finally, according to Reuters, the US Department of Justice (DOJ) is nearing completion of its investigation on Binance exchangewhich began in 2018. The December 12 report suggests a conflict between prosecutors over whether the evidence is sufficient to bring criminal charges.

Let's look at derivatives metrics to better understand how professional traders are positioning themselves in current market conditions.

Asia-based stablecoin premium falls to 2-month low

The USD currency (USDC) premium is a good indicator of demand for China-based retail cryptocurrency merchants. Measures the difference between China-based peer-to-peer transactions and the US dollar.

Excessive buying demand tends to push the indicator above 100% fair value and during bear markets the stablecoin market supply is flooded, causing a discount of 4% or more.

The USDC premium currently sits at 99%, down from 102.5% on December 3, indicating lower demand for stablecoin purchases from Asian investors. The data gains relevance after the multiple failed attempts to break above the $17,250 resistance.

However, this data should not necessarily be bearish because the stablecoin position could have been converted to fiat (withdrawal) solely due to counterparty risks, meaning investors withdrew from the exchanges.

Leverage Buyers Ignored Failed Resistance Break

The long-to-short metric excludes externalities that might have affected only the stablecoin market. It also collects data from exchange clients' positions in spot, perpetual and quarterly futures contracts, providing better insight into how professional traders are positioned.

There are occasional methodological discrepancies between different exchanges, so readers should monitor changes rather than absolute numbers.

Even though Bitcoin failed to break the $17,250 resistance, professional traders have kept their leveraged long positions unchanged according to the long-short indicator.

For example, the ratio for Binance traders slightly decreased from 1.08 on December 5 to the current level of 1.05. Meanwhile, Huobi showed a modest decline in its long-short ratio, with the indicator moving from 1.04 to 1.02 in the seven days to December 12.

However, on the OKX exchange, the metric increased from 1.04 on December 5 to the current ratio of 1.07. Therefore, on average, traders held their leverage ratio throughout the week, which is encouraging considering the lackluster price action.

Bitcoin's $17,250 resistance is losing steam

There is an old saying: "if a support or resistance continues to be tested, it is likely to weaken." Currently, the stablecoin's premium and major long-short traders suggest leverage buyers are not getting behind despite multiple failures to break above $17,250 in December.

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Even though the Asian stablecoin premium is no longer around, the 1% discount is not enough to signal discomfort or angst for sellers. Furthermore, the long-short ratio of the major traders was flat compared to the previous week.

Data from those two markets supports the thesis that Bitcoin breaks above $17,250 as long as the US FED meeting on December 14 signals that interest rate hikes are coming to an end. If this were the case, the bearish investor sentiment could die down as the bears will become less confident, especially if the Bitcoin price sustains at the $17,000 level.