Long Bitcoin bottom, or watch and wait? Bitcoin Traders Plan Their Next Move

Bitcoin price fell to $18,270, but derivatives traders were unfazed. Here's why.

Market analysis

Bitcoin (BTC) faced a 9% correction in the early hours of September 19 as the price fell to $18,270. Even though the price quickly rebounded above $19,000, this level was the lowest price seen in three months. However, professional traders held their ground and were not inclined to take the loss as measured by derivative contracts.

Bitcoin/USD price index, 2 hours . Source: TradingView

It is extremely difficult to determine the reason for the crash, but some say US President Joe Biden's CBS "60 Minutes" interview raised concerns about The world war. When responding to the question of whether U.S. forces would defend Taiwan in the event of a Chinese-led invasion, Biden replied, "Yes, if in fact there was an unprecedented attack."

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Others cite China's central bank lowering the cost of borrowing for 14-day reverse repurchase agreements to 2.15% from 2.25%. The monetary authority is showing signs of weakness in the current market conditions by injecting more money to stimulate the economy amid inflationary pressure.

There's also pressure from the upcoming US Federal Reserve Committee meeting on September 21, which is expected to raise interest rates by 0.75% as central bankers work to ease the pressure inflationary. As a result, 5-year Treasury yields climbed to 3.70%, the highest level since November 2007.

Let's look at crypto derivatives data to understand if professional investors changed their stance as Bitcoin crashed below $19,000.

There was no impact on BTC derivatives metrics during the 9% crash

Retail traders generally avoid quarterly futures contracts because of their price difference from spot markets, but they are the preferred instruments of professional traders because they prevent fluctuation in the funding rate...