Bitcoin Struggles To Turn $24,000 To Support But Data Shows Professional Traders Stacking Bets
Bitcoin (BTC) rallied on the back of the US Federal Reserve’s decision to raise interest rates on July 27. Investors interpreted Federal Reserve Chairman Jeremy Powell’s statement as more dovish than the previous FOMC committee meeting, suggesting that the worst moment of economic policy tightening is behind us.
Another positive news for risk assets came from the US personal consumption expenditures (PCE) price index, which rose 6.8% in June. The move was the largest since January 1982, and reduced incentives for fixed-income investments. The Federal Reserve focuses on PCE because of its broader measure of inflationary pressures, measuring the price changes of goods and services consumed by the general public.
Further positive news came from Amazon after the e-commerce giant reported that its quarterly financial results beat the forecast revenue of $119.5 billion by 1.4%. Additionally, Apple released its 2Q results on the same day, matching analysts’ revenue estimates while posting earnings 3.4% above market consensus.
Top traders have increased their bullish bets
Exchange-based data highlights traders’ net long-to-short positioning. By analyzing each client’s position on spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.
There are occasional discrepancies in methodologies between different exchanges, so viewers should monitor changes rather than absolute numbers.
Despite Bitcoin’s 14% correction from July 20 to July 26, top traders on Binance, Huobi and OKEx have increased their leverage lengths. To be more precise, Binance was the only exchange to face a modest reduction in its top traders’ long-to-short ratio, going from 1.22 to 1.20.
However, this impact was more than offset by OKEx traders increasing their bullish bets from 0.66 to 1.17 in six days. The absence of panic selling after Bitcoin failed to break the $24,000 support on July 20 should be interpreted as bullish.
Had buyers used excessive leverage or distrusted a potential upside, the price move would have caused major damage to the long-to-short ratio.
Related: 3 Bitcoin Trading Behaviors Suggest BTC’s Decline to $24K is a ‘Fakeout’
Margin traders are not willing to place bearish bets
Margin trading allows investors to borrow cryptocurrency to leverage their trading position, thereby increasing returns. For example, one can buy Bitcoin by borrowing Tether (USDT), thereby increasing their crypto exposure. On the other hand, borrowing Bitcoin can only be used to short it – betting on the price decline.
Unlike futures contracts, the balance between margin longs and shorts is not necessarily matched. When the lending margin is high, it indicates that the market is bullish – the opposite, a low lending ratio, signals that the market is bearish.
The chart above shows that investor morale bottomed out on July 21 when the ratio hit a four-month low of 8.6. From that point forward, OKX traders presented less demand to borrow Bitcoin, solely used to bet on the price decline. The ratio currently stands at 13.8, which leans positively in absolute terms, as it favors stablecoin lending by a large margin.
Derivatives data shows no stress from professional traders even though Bitcoin traded below $21,000 on July 26. Unlike retail traders, these seasoned whales know when to stick to their convictions, and this attitude was clearly reflected in the healthy derivatives data. The data suggests that traders expecting a strong market correction if Bitcoin fails to break the $24,000 resistance will be disappointed.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trade involves risk. You should do your own research when making a decision.
