Bitcoin’s bottom is below $15.5k, but traders are getting super bullish
- Bitcoin derivatives data and the long-to-short ratio on the exchanges show that traders remain bullish on the BTC price.
- However, on-chain data shows aggressive selling of Bitcoin miners and capitulation, which is a worrying sign.
In this month of November 2022, Bitcoin price is down by more than 20 percent amid all the chaos created by the collapse of the crypto exchange FTX. With FTX filing for bankruptcy on November 11, Bitcoin bears have had a major hold on Bitcoin trying to hold above $16,000 levels.
But on Monday, November 28, there was a huge transfer of 127,000 Bitcoins from a Binance Gold wallet. This massive Bitcoin transfer was enough to create fear, uncertainty and doubt (FUD), but Binance CEO Changpeng Zhao announced that it was part of an audit process.
Bitcoin derivatives and the margin market offer some insight into how professional traders are positioned. This is because it allows investors to borrow digital assets to leverage their positions.
As the Bitcoin price fell to $15,500 levels earlier this month, professional traders increased their leveraged longs. This is quite visible in the chart below as OKX traders’ margin lending rate increased from November 20th to November 27th.
In addition, the long-short report shows that professional traders continue to maintain their long positions even as the BTC price faces strong resistance at $16,700. In the period between November 21 and November 28, the long-short ratio of Binance traders improved from 1.00 to 1.05.
Over the seven-day period, this ratio saw a more significant increase as the indicator moved from 1.01 to 1.08. However, on the OKEx crypto exchange, the metric decreased slightly from 0.99 to 0.96. Currently, the Bitcoin price is finding support at $16,200, which shows that traders are becoming partially bullish. The derivatives data also shows strong support at $16,000.
Some Concerns for Bitcoin Investors
One of the biggest concerns for Bitcoin investors, for now, is that BTC miners have been selling their Bitcoin holdings aggressively throughout November. This shows signs of heavy miner capitulation which could lead to a further drop in BTC price.
Miner capitulation occurs when the Bitcoin miners sell their holdings to cover costs and are eventually moved out of the network. The continued selling pressure on Bitcoin throughout this year has put miners in this position.
Also, the decline in the Bitcoin hash rate is another signal flashing towards concern. On a 7-day moving average, the Bitcoin hashrate is nearly 14 percent below its all-time high. During the next difficulty adjustment, a week from now, the Bitcoin mining difficulty will be -9 percent from here. This also suggests strong miner capitulation.
Bitcoin miners have been selling relatively aggressively.
Combined with the hashrate decline and thus today’s hashband bearish cross, this indicates that we are indeed in a period of miner capitulation. pic.twitter.com/vVnqetYbn9
— Will Clemente (@WClementeIII) 28 November 2022
Some market experts also believe that the contagion from the FTX collapse could spread further. Cici Lu, the founder of Venn Link Partners, said:
The credit contagion is far from over. There is still very little visibility, in the second and third layer of counterparty risk, when it comes to who is exposed to what.
Last week, a Bloomberg analyst warned that Bitcoin still hasn’t bottomed and could correct another 40 percent from today’s levels all the way to $10,000.
