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This key Bitcoin price indicator shows pro traders buying each dip

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This key Bitcoin price indicator shows pro traders buying each dip


Bitcoin (BTC) may need didn’t maintain the $42,000 assist, and for a lot of, this can be a barely bearish signal. Apparently, the downward transfer occurred shortly after Saudi Aramco, KSA’s largest oil exporter, denied claiming to start 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 in the number of “active entities,” in keeping with Glassnode. This indicator might 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 high traders BTC long-to-short ratio (above) and BTC price at Bistamp in USD (beneath). Supply: OKEx & TradingView

Discover how OKEx high 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.

However, 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 isn’t any approach to know if these traders closed brief positions or successfully added longs. To higher perceive this motion, one wants to research margin lending knowledge.

Lending markets present further perception

Margin buying and selling permits buyers to borrow cryptocurrency to leverage their buying and selling place, subsequently rising the returns. For instance, one should purchase cryptocurrencies by borrowing Tether (USDT), thus rising the publicity. However, 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 all the time matched.

OKEx USDT/BTC margin lending ratio. Supply: OKEx

The above chart shows that traders have been borrowing extra Tether not too long ago, because the ratio elevated from 2.00 on July 30 to 2.50. The info 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 current BTC price drop.

Derivatives knowledge leaves little question that OKEx high traders added lengthy positions at the same time as Bitcoin corrected 9% from the $42,600 high within the early hours of August 1.

Not like retail traders, these heavyweights can face up to some troubled waters, though neither the long-to-short indicator nor the margin lending present indicators of extreme leverage.

In the meanwhile, 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 author and don’t essentially replicate the views of Cointelegraph. Each funding and buying and selling transfer includes threat. You need to conduct your personal analysis when making a call.