2 Bitcoin indicators show that professional traders expect US$36 thousand
Bitcoin’s price has risen again to $35,000, but the main indicators show that the main traders are acting with caution.
Bitcoin (BTC) has recently recovered $35,000, but major Huobi, OKEx and Binance operators are not buying the break. Unlike smart institutional investors who may be desperate for protection against fiat degradation, investors more focused on cryptomorphs seem to be waiting for falls.
Institutional investors may also be celebrating the announcement on January 4 that the Comptroller of the Currency will allow banks to include stablecoins in the functions allowed by banks. This further validates the sector and could result in an increase in institutional participation in space.
Normally, after a new historical high is reached, the price of Bitcoin retreats while some traders make profits and bears consider opening short positions near the new „top“.
Traders focused on crypt currencies are well aware of Bitcoin’s volatility, and the recent drop to $27,000 serves as a perfect example.
To effectively measure how crypto currency traders have positioned themselves, investors should monitor the long-to-short ratio of major traders in major crypto currency exchanges.
Note how the main operators of Huobi have been reducing their long positions in the last two days. Meanwhile, the main operators of Binance have been sitting side-by-side throughout this period.
It is important to note that the exchanges gather data about the main traders in a different way because there are several ways to measure the net exposure of clients. Therefore, any comparison between different providers should be done in percentage changes instead of absolute numbers.
OKEx was the only exception, as its metrics of major traders showed that investors went short while BTC momentarily fell apart on January 4th, but this trend reversed when support of $31,000 was restored. This data indicates that these traders are chasing the market rather than placing bets before the move.
Overall, it is safe to conclude that the „best“ traders were not responsible for the current bullish run.
The futures financing rate is holding steady
Perpetual contracts, also known as reverse swaps, have a built-in fee which is usually charged every eight hours. When the buyers (longs) are the ones who demand the most leverage, the financing fee becomes positive. Therefore, it is the buyers who pay the fees. This problem is especially true during bullfights, when there is usually more demand for longs.
BTC’s perpetual future financing fees.
As shown above, the funding rate rose to an exceptionally high level of 5% weekly on the FTX exchange on January 4. Regardless of this rarity, the average weekly funding rate of 1% appears exceptionally modest considering Bitcoin’s 18% rise over the last six days.
At the moment, it is clear that the main traders on the main exchanges are not the ones leading the recent buying activity. These short-term traders appear to be expecting lower entry points according to their long and short positions data and the financing rate at the derivatives exchanges.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of the Cointelegraph. Every investment and trading movement involves risk. You should conduct your own research when making your decision.