Bitcoin
This key Bitcoin price indicator shows pro traders buying each dip
Bitcoin (BTC) might need did not maintain the $42,000 assist, and for a lot of, it is a barely bearish signal. Apparently, the downward transfer occurred shortly after Saudi Aramco, KSA’s largest oil exporter, denied claiming to start out mining Bitcoin.
Prime traders at exchanges seized the chance so as to add leverage-long positions, a transparent bullishness indicator. Moreover, margin traders have been rising their stablecoin borrowing, indicating that whales {and professional} traders predict extra upside from cryptocurrencies.
The 24% weekly rally that took Bitcoin from $34,000 to its highest stage since Could 20 was fueled by a 30% surge within the variety of “lively entities,” in response to Glassnode. This indicator may have triggered these savvy traders to extend their positions regardless of the lackluster price efficiency.
Pro traders are utilizing leverage to purchase beneath $40,000
OKEx prime traders BTC long-to-short ratio (above) and BTC price at Bistamp in USD (beneath). Supply: OKEx & TradingView
Discover how OKEx prime trades have elevated their Bitcoin longs from 0.68 on July 31 to 1.16 two days later. A 0.68 ratio signifies these whales {and professional} traders’ lengthy positions have been 32% smaller than their respective brief bets, positions that benefited from a price lower.
Alternatively, the 1.16 long-to-short favored bullish positions by 16% and mirrored confidence even because the Bitcoin price dropped beneath $40,000 on August 2.
Nevertheless, there is no such thing as a method to know if these traders closed brief positions or successfully added longs. To raised perceive this motion, one wants to research margin lending knowledge.
Lending markets present extra perception
Margin buying and selling permits buyers to borrow cryptocurrency to leverage their buying and selling place, due to this fact rising the returns. For instance, one should buy cryptocurrencies by borrowing Tether (USDT), thus rising the publicity. Alternatively, borrowing Bitcoin can solely be used to brief it, betting on the price lower.
Not like futures contracts, the stability between margin longs and shorts is not at all times matched.
OKEx USDT/BTC margin lending ratio. Supply: OKEx
The above chart shows that traders have been borrowing extra Tether just lately, because the ratio elevated from 2.00 on July 30 to 2.50. The information leans bullish in absolute phrases as a result of the indicator favors stablecoin borrowing by 2.5 occasions. It additionally shows resilience within the face of the latest BTC price drop.
Derivatives knowledge leaves little doubt that OKEx prime traders added lengthy positions at the same time as Bitcoin corrected 9% from the $42,600 prime within the early hours of August 1.
Not like retail traders, these heavyweights can stand up to some troubled waters, though neither the long-to-short indicator nor the margin lending present indicators of extreme leverage.
For the time being, longs seem assured within the face of a pure correction that occurred after an 11-day rally.
The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer includes threat. It is best to conduct your individual analysis when making a choice.
