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Key Bitcoin price metric shows pro traders increased their BTC longs

Key Bitcoin price metric shows pro traders increased their BTC longs

Bitcoin (BTC) may have hovered between $57,000 and $59,500 in recent days, but top traders on the major exchanges have increased their long positions. The monthly futures contracts moved in line with the increase in the underlying price.

Bitcoin price on Coinbase, USD. Source: TradingView

Key Bitcoin price metric shows pro traders increased their BTC longs

After being murdered on the 13th. After reaching an all-time high of $61,750 in March, bitcoin is now trying to find new levels of support. Although BTC was initially held at $54,000, there now seems to be decent buying activity around $57,000.

Although the optimism of professional traders (as measured by their long and short positions and the futures premium) has dropped significantly, their interest seems to be on the rise again, which is a bullish indicator.

Major traders increase their long positions

The Top Traders Long/Short Indicator is calculated based on consolidated client positions, including cash, margins, perpetual and futures contracts. This measure provides a broader picture of the true net position of professional traders by collecting data from multiple markets.

Best trader ratio between long and short positions. Source: Bybt

Key Bitcoin price metric shows pro traders increased their BTC longs

Despite the differences between crypto-currencies, analyzing changes over time provides valuable information.

OKEx’s top traders really capitalized on the recent BTC price movement when they saw the drop on March 15 and reached a ratio of 1.35 in favor of long positions, which is the highest level in 2 weeks.

Huobi’s top traders performed similarly, but on a smaller scale, increasing their ratio from 0.80 to 0.90. Note that this does not necessarily mean that these traders are bearish, as the net short position of 10% is their average over the last 30 days.

Finally, the best traders on Binance reduced their long positions when BTC reached 15. The collapse in March, but they have since maintained a ratio of 1.21, favoring long positions by 21%.

Overall, the primary dealers’ average long/short position rose from 1.03 (flat) on January 14 to the current level of 1.15, which plays to the advantage of net long positions. It is therefore clear that the arbitration committees and the whales extended their duration during the $500 million liquidation.

Premium for futures increased in recent days

To assess the effectiveness of the optimism of the professional traders, one must follow the evolution of the futures premium (also called base premium). This indicator measures the price difference between forward prices and the regular cash market.

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3-month futures typically trade at a premium of 6-20% per year, as sellers charge a higher price to delay settlement, creating a price differential.

OKEx 3-Month Futures Basis. Source: Crouch.

Key Bitcoin price metric shows pro traders increased their BTC longs

Note that the indicator at 17. In March, just before the price of BTC jumped from $55,500 to $58,000, there was a 20% low. Since then, the base has improved to 25%, indicating that professional traders have increased their net lengths.

This data confirms the ratio of long to short positions on the exchanges and shows that investors are confident that bitcoin will reach a new all-time high in the near future.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.

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