Professional investors did not miss the drop in bitcoin price

Bitcoin (BTC) has spent sixteen days since April 17, when the $ 5 billion long position was liquidated, trying to hold onto the $ 55,000 support. The correction experienced by the largest cryptocurrency after reaching $ 64,900 had a devastating effect on the sentiment of individual investors, as evidenced by the decline in the funding rate for continuous futures.

Still, despite Bitcoin’s poor performance and a 6.5 percent drop on May 4th, professional investors have spent the past 24 hours buying at the bottom price. The activities of professional investors can be observed in the long / short position ratio of OKEx futures and Bifinex’s margin credit markets. The calmness of individual investors, on the other hand, is reflected in the funding rate of continuous futures, which are in a neutral state.

Bitcoin Price Index: How much is 1 Bitcoin in TL? (BTC TL)

8-hour funding rate for perpetual futures with USDT margins. Source: Bybt

As seen above, the 8-hour funding rate for continuous futures has been below 0.05 percent over the past few weeks. The price of end-of-month contracts differs significantly compared to spot exchanges and reflects the imbalance between the leverage of long and short positions.

About: What are short and long positions?

This difference lies behind the constant preference of individual investors for futures transactions.

The eight-hour wage, which is currently equivalent to the 1 percent weekly rate, indicates a slight imbalance in long positions. Still, this level is still well below the rates of 0.10 percent and above seen in early April. The data reveals that individual investors are not willing to open a long position, even though BTC has corrected 9 percent in two days.

On the other hand, the long / short position ratio of high-income investors reached the highest level in the last 30 days, signaling that they were buying.

Long / short position ratio of high income investors at OKEx. Source: Bybt

According to the chart above, the current long / short position ratio of OKEx futures shows that long positions are predominant at 94 percent. Buying activities began on May 4, with BTC falling below $ 55,000. Moreover, these buying activities reflect more confidence compared to April 14, when BTC skyrocketed to $ 64,900.

Still, it is necessary to evaluate the margin markets to compare whether this trend is widespread or not. Leading exchange Bitfinex, for example, includes a leveraged Bitcoin position of over $ 1.8 billion.

BTC price (orange, left) and Bitfinex’s long / short margin ratio (blue, right). Source: TradingView

Bitfinex is showing significant growth in BTC margin markets. Long positions represent more than fifty times the amount borrowed by short positions. These levels, unprecedented in the stock market, also confirm the data on the OKEx futures market.

There is no doubt that professional investors viewed BTC’s short-term performance extremely positively despite the May 4th drop. Individual investors, on the other hand, seem to be focusing on altcoins in the current situation.

Eighteen of the fifty largest altcoins have gained 45 percent in the past thirty days.

The opinions and views expressed herein are those of the author alone and do not reflect the views of Cointelegraph. Every investment involves risk. Do your own research before making a decision.

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