Bitcoin (BTC) began to rise rapidly after Tesla announced that it had invested $ 1.5 billion in digital assets last day, and has exceeded $ 47,500 by the time of translation release. In less than two hours, short positions worth $ 555 million were then liquidated, and the open positions of Bitcoin futures rose to $ 13.7 billion, just 3 percent away from their all-time high.
Such price movements have significantly increased the cost of opening long positions, especially for those who are constantly using futures.
Bitcoin Price Index: 1 Bitcoin How Many TL? (BTC TL)
As seen in the chart above, the total open position of BTC futures reached a record level of $ 15 billion.
When the market encounters unexpected positive news, it is natural for investors to take highly leveraged positions. This applies to both short position holders who suffer losses in their initial investments and long position holders who want to increase their positions.
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After the initial rise, the funding rate is expected to increase and the fee long position holders pay to keep their permanent futures contracts open is expected to rise.
Aiming to balance the leverage difference between long and short position holders on the chart above, the 8-hour wage reached 0.25 percent. This rate corresponds to 5.4 percent per week.
As seen on Jan. 29, even as the Bitcoin price continues to rise, the funding rate tends to regulate itself. There are two reasons for this: leveraged buyers are investing more money and arbitrage beneficiaries are constantly taking short positions in futures while buying BTC in the spot market.
The 8-hour funding rate ranging from 0.05 percent to 0.10 percent is considered normal, especially in bull markets. This fee, which corresponds to between 4.6 percent and 9.4 percent per month, does not pose a problem for leveraged long positions.
It will be useful to examine the long / short position ratio in major stock markets to understand how whales and arbitrage beneficiaries took positions during this period.
OKEx traders traded before the rise
Top investors at Binance held 33 percent net long positions before the rally on Feb. 8. After the Tesla news spread, this rate increased to 46 percent, the highest level seen in almost a month.
On the other hand, Huobi’s top investors remained relatively unresponsive to the news. The short position ratio, which was 26 percent before February 8, is currently 28 percent.
Finally, OKEx’s top investors increased their long positions to 14 percent before the February 8 rally. Investors, somehow correctly predicting the rally, quickly reduced their net long positions after BTC broke the record.
Although the instant high funding rate confuses long position holders, there are currently no signs that buyers are using too much leverage.
This means that the Bitcoin price can continue to rise.
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