Traders tend to become skeptical after Bitcoin (BTC) “completes” high numbers such as the $ 12,000 to $ 15,950 trades seen in recent weeks.
The 35% gain over the past 30 days has led some traders to conclude that BTC has increased too much and needs to be rolled back. On the other hand, many traders are confident that the current bullish trend may continue.
In general, the market is giving mixed signals as the price of bitcoin fluctuates between $ 15,000 and $ 16,000, so many traders have to rely on their bias to validate their investment decisions, which is a dangerous place.
Fear and Greed Index for Cryptocurrencies (daily). Source: data on digital assets.
Take, for example, the Crypto Fear and Greed Index, which currently reads 90, which is a reflection of “90 Extreme Greed.” Many traders trade the indicator when it shows points of extreme polarity, which means “extreme greed” is a signal to take a profit or sell, as it usually “means the market is correcting,” according to the website.
In addition, data from both the chain and the exchange of cryptocurrencies have led analyst Willie Wu to “a sudden spike is unlikely.” To resolve this dispute with data, an investor can take a closer look at the exchanges of large clients (or larger traders) in the long and short term.
The best Binance BTC traders have long or short relationships. Source: Binance
Notice how the top traders on Binance have reacted to the Bitcoin move. The histogram shows that traders are reacting to price rather than trying to predict it. This move can be expected from a few newbies buying local highs and selling lows.
It should be noted that each exchange handles the data of large traders differently, as there are several methods to measure the net exposure of derivatives clients. Therefore, any comparison between different service providers should be based on percentage changes, not absolute numbers.
Interestingly, the OKEx data showed a different approach from that of the best traders when Bitcoin climbed above $ 15,800. Rather than blindly following price, these investors seem to wait up to two days before changing their strategy.
OKEx BTC: Best Long to Short Traders. Source: OKEx
While this strategy seems more sensible at first glance, it adds to the desire as Bitcoin has not maintained the $ 15,600 level. Despair seems less in comparison to the reactive behavior of Binance traders. However, there are signs of confidence in OKEx long and short positions.
Sometimes it’s better not to trade at all
Regardless of how successful these strategies are, the long to short ratio on both exchanges shows that traders are not very confident about the current Bitcoin price movement. While both appear to be net long at the moment, their positions are changing as market sentiment changes.
Faced with mixed signals, traders should avoid trying to find more evidence to support their point of view. Doing nothing is sometimes the best decision to make, especially when professional traders seem to change positions after small changes in direction.
Chain analysis, pure stock market flows, and indicators such as the Fear and Greed Index are helpful. However, they should not be excluded from analysis when conflicting messages are presented.