Bitcoin (BTC) fell 6.7% from October 31 to November 4, breaking the $67,500 level for the first time in eight days. The decline resulted in the liquidation of more than $190 million in leveraged long positions and coincided with uncertainty surrounding the November 5 US presidential election.
Despite this short-term bearish momentum, three Bitcoin derivatives indicators show that the market is not panicking. These positive indicators include the long/short ratio of the exchange’s top traders, total BTC futures open interest, and stablecoin demand in China.
Exchange long/short ratios from top traders. Source: Coinglass
Whales and market makers on Binance and OKX show relative confidence in Bitcoin’s price recovery based on their total spot and futures positions. The indicator has shown no signs of weakness, despite falling below $67,500 as recently as November 4th.
Traders remain optimistic about the price of Bitcoin but are hesitant to push it above $70,000. Some analysts argue that a victory for Kamala Harris and Democrats could lead to greater regulatory scrutiny and limit the integration of cryptocurrencies and traditional finance.
The US election creates uncertainty and limits near-term upside.
Crypto Rand, a pseudonymous cryptocurrency trader, suggested that Kamala Harris’ unclear stance on cryptocurrencies “sows seeds of uncertainty,” adding, “Uncertainty can be worse than opposition.” Even if Harris’s policies ultimately benefit the industry, they are unlikely to match the promises of Republican candidate and former President Donald Trump.
Trump hinted that he would fire SEC Chairman Gary Gensler “on day one,” although his specific plans to encourage Bitcoin adoption are still unclear. There is also debate about the speed at which significant changes in government agencies and the U.S. Treasury can occur. Therefore, investors see limited incentive to push Bitcoin prices to all-time highs regardless of the US election outcome.
A key driver of the expectations gap surrounding the US presidential election is the focus on “digital assets,” including central bank digital currencies (CBDCs) and tokenized assets, which are distinct from and largely unrelated to Bitcoin. Using blockchain technology for digital representation of real-world assets will have minimal impact on overall Bitcoin demand.
Analyzing total Bitcoin futures open interest is essential to ensure that professional traders are reducing their exposure. A sharp decline in this indicator signals discomfort with sector exposure, regardless of whether sentiment is bullish or bearish.
Bitcoin futures open interest, BTC is added. Source: Coinglass
BTC open interest is currently at 582,000, similar to the previous week and 10% higher than the October 4th level. This suggests that investors are increasing their leveraged positions despite recent uncertainty and price declines. Combined with long- and short-term data from top traders, this indicates moderately bullish sentiment even after Bitcoin surged above $73,500 on October 29.
USD Tether (USDT) is traded based on the official USD/CNY exchange rate. Source: OKX
In China, traders have shown resilience, with the USD Tether (USDT) stablecoin trading close to fair value against the official USD/CNY exchange rate. During periods of high cryptocurrency outflow demand, USDT often trades at a premium of over 2%. Overall, derivatives indicators show no signs of stress and traders appear confident that the bull market will resume after the US presidential election.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.