Key Bitcoin price metric signals traders are positioned for $50K BTC
The price of Bitcoin (BTC) jumped 25 percent after Tesla’s $1.5 billion investment was announced this week. Prior to this event, BTC was 7.5% behind Ether (ETH), but a number of bullish events in recent days have helped BTC reach a new record high of $48,900.
Prior to Tesla’s announcement, the price of BTC fluctuated between $30,000 and $41,500 for nearly three weeks, and after the price spiked, one would expect pro traders and arbitrage boards to follow the upward trend.
Instead of taking long positions, many leading traders opened short positions when the BTC started a 25% move. This seems risky considering that Bitcoin was hailed by the co-chair of JPMorgan this week and that regulators have approved the approval of a BTC ETF in Canada.
Bitcoin and Ether prices USD to Bitstamp. Source: NYDIG Digital Asset Data
Historical data shows that the price of bitcoin tends to trade in tandem with the price of ether, which has been rising sharply for several months. In addition to this bullish scenario, the Bitcoin Lightning Network announced a record number of nodes, with the total value of the lock (TVL) exceeding $42 million.
Mastercard also announced that it will support cryptocommunication payments on its network by the end of 2021.
These bullish signals contrast with the long and short net position measurements provided by the major cryptocurrent exchanges.
This indicator is calculated by analyzing a customer’s consolidated position in spot, forward and open-ended contracts and provides an indication of whether professional traders are more bullish or bearish.
It is important to note that there are sometimes differences in methodology between the different exchanges. Viewers should therefore keep an eye on the changes rather than the absolute numbers.
BTC’s best stock traders with the best long/short ratio. Source: Bybt.com
Since Tesla’s announcement on February 8, the major securities dealers have maintained their net positions relatively unchanged.
Prior to Bitcoin’s 25% rally, Binance had a ratio of 1.33, favorable to long positions, consistent with the previous week. This ratio peaked at 1.53 on February 10, but has since fallen to 1.31.
On the other hand, the best traders in Huobi had an indicator of 0.74 before February 8, which remained unchanged for three days. On February 11, when the BTC rose from $44,000 to $48,000, these traders started to increase their net long positions, reaching the current level of 0.80. Although this level still favors net short positions by 20%, it has remained above the 0.75 mark since January 29.
Finally, OKEx’s major traders held a net long position of 14% before the Tesla information was released. Although they returned to a net short position of 47% on the same day, the indicator has declined to 1.03 over the last four days. OKEx operators currently remain well below the 52% net long position compared to two weeks earlier.
Betting could take on the best traders
The best traders could also move their BTCs over the counter in search of better profit opportunities. So, assuming they introduced short positions just by monitoring central trading, this could be a brilliant conclusion.
At this time, the indicator does not show the extremely long net positions of the arbitrage tables, market makers and whales. A balanced derivatives market suggests that there is a lot of room for buying activity if the BTC continues to rise to $50,000 or more.
The views and opinions expressed in this document are solely those of the author and do not necessarily reflect the views of Cointelegraph. All investments and business transactions involve risk. You must do your own research when making decisions.
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