As Bitcoin (BTC) tested the $43,000 support for the tertiary consecutive day, whales bought the dip on derivatives exchanges. While there has been no pregnant price modify, the Bitcoin futures premium reached its everyman level in half dozen months. This indicator matches Dec. xi, 2020, when Bitcoin hit a $17,600 low simply ten days after making an all-time high at $19,915.

Bitcoin/USD price on Coinbase, December 2020. Source: TradingView

In December 2020, derivatives action triggered a 95% rally in 23 days, taking Bitcoin to a new high at $42,000. In addition to the futures premium bottoming, rumors of potentially harmful United States regulation played a cardinal-phase office in the market downturn in both instances.

Regulatory uncertainties are dorsum to the spotlight

This time effectually, U.Southward. Treasury Secretary Janet Yellen stated at the Washington Square Periodical CEO Quango Summit on May 4 that:

"There are issues around money laundering, Bank Secrecy Human action, apply of digital currencies for illicit payments, consumer protection and the similar."

On May half dozen, U.S. Securities and Exchange Commission chair Gary Gensler punted to Congress the idea of providing more regulatory oversight to the crypto infinite. Gensler said:

"Right now, there's not a marketplace regulator around these crypto exchanges, and thus there's really no protection confronting fraud or manipulation."

Adding to the regulatory haze, on May 11, the U.Due south. Securities and Exchange Commission issued an investor warning pointing out risks of mutual funds that have exposure to Bitcoin futures.

OKEx Bitcoin 3-month futures annualized premium, December 2020. Source: Skew

As Bitcoin reached a $19,915 all-time high on Dec. 1 and the futures premium spiked above 15%, the premium reacted to the price correction. Although the 8% depression seems about the previous month's average, it is very modest because Bitcoin had rallied xc% in two months.

Notice that as soon as the $17,600 level proved its strength, the futures premium spiked to xv%, indicating optimism.

OKEx Bitcoin 3-month futures annualized premium, May 2021. Source: Skew

The current situation began differently, every bit the marketplace has been excessively optimistic from the start. However, the situation drastically changed over the past calendar week as Bitcoin dropped 26%. This move caused the futures premium to accomplish its lowest level in half dozen months at 8%.

Whales aggressively bought below $43,000

However, the bearish sentiment on May 17 lasted for a very short menses, as whales finally decided it was time to buy the dip.

The tiptop traders' long-to-short indicator is calculated using clients' consolidated positions, including margin, perpetual and futures contracts. This metric provides a broader view of the professional traders' effective net position past gathering information from multiple markets.

Pinnacle traders Bitcoin long-to-curt ratio at OKEx. Source: Bybt

Top traders on OKEx moved from a 1.62 long-to-short ratio on May sixteen to a ii.74 peak every bit Bitcoin tested the $43,000 support in the early hours of May 17. This information indicates that whales and market makers had long positions almost three times larger than shorts, which is very uncommon.

While their bullish bet remains, it signals a complete design from the previous week. Business organisation intelligence firm MicroStrategy too scooped up another $10 meg worth of Bitcoin at an boilerplate toll of $43,663.

Although information technology might be likewise soon to declare that the correction phase has concluded, at that place seems to exist enough evidence regarding the futures premium bottoming and whales' intense buying activity beneath $43,000.

If history repeats and a 95% rally follows suit, Bitcoin could achieve $83,000 in mid-June.

The views and opinions expressed hither are solely those of the author and do non necessarily reflect the views of Cointelegraph. Every investment and trading move involves take a chance. You should conduct your own enquiry when making a decision.