Whales bought aggressively when Bitcoin went below $ 36,000

The negative news flow about Bitcoin (BTC) and the general cryptocurrency market has been continuing uninterrupted for the last few weeks.

In addition to the “FUD (Fear, Uncertainty and Doubt)” feeling spread to the market, the news flow from China negatively affected the investors, even though they did not take any action. As it is known, the Chinese government has repeated its plans to “reduce Bitcoin mining and trading transactions”.

While individual traders fear such news, whales and market makers see it as an opportunity to buy. Because they took action when the Bitcoin price fell to $ 36,200.

China banned Bitcoin trading (in 2017)

Minutes of the China Financial Stability and Development Committee issued guidelines on many issues, including a reform plan for medium-sized financial institutions, and cessation of illegal securities transactions. Therefore, neither an attack on Bitcoin nor a situation different from the actions that took place in previous years has emerged.

On May 18, trade associations, financial institutions and other member institutions within the Bank of China were warned not to engage in crypto trading.

However, trading in cryptocurrencies in China has been banned since September 2017. Concerns about carbon emissions from Bitcoin mining operations were also highlighted three weeks ago by the Chinese state media outlet PengPai.

Even market-making platforms have been targeted by Chinese officials since 2018. Some cryptocurrency trading platforms continued to operate illegally in the country, but most were detected and closed by authorities in 2019.

Derivatives markets point to accumulation

BTC long-short ratio of OKEx’s biggest investors. Source: Bybt

With the data provided by the exchange, traders’ long and short positions can be monitored. By analyzing the positions of investors in permanent and futures contracts, a clearer view can be obtained as to whether professional traders expect an upward or downward trend.

Whaling and market makers at OKEx reached 1.08 long-short in the early hours of May 21 and supported long products at 8 percent. It is worth noting that this level is the lowest in 30 days. However, professional traders took a bullish position, preferring long-term products by 62 percent as Bitcoin fell below $ 37,000.

Volume increases confirm the theory

Transaction volume is one of the best indicators to verify whale activity. Although every transaction has a buyer and a seller, excessive volatility can occur at low transaction volumes. Therefore, it does not have to include professional traders.

Bulk Bitcoin spot volume. Source: Coinalyze

Looking at the data above, it becomes clear that the whales and market makers aggressively bought the $ 36,200 drop on May 21. Spot trading volumes exceeded $ 5.6 billion in four hours, which is considered excessive even for 12 percent price action.

Last month’s average daily volume was $ 11 billion. Therefore, combining this data with the long-to-short rates of derivatives exchanges, it is necessary to assume that some of the big players are bold enough to buy at the bottom price.

Although no one can predict with certainty whether $ 35,200 will hold up over the weekend, it is necessary to expect that investors with large positions will not sell for a long time.

The opinions and comments expressed here are only to the author belongs. It may not reflect Cointelegraph’s views. Every investment and trading transaction involves risk. When making your decision, you should do your own research.

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