Bitcoin (BTC) has struggled to maintain its $ 55,000 support level over the past 16 days, or mainly since April 17, the record liquidation of a $ 5 billion contract. The failure that occurred after the peak of the era of $ 64,900 had a devastating effect on retailer sentiment, as evidenced by a significant decline in the constant funding rate in the future.
Although Bitcoin has recently weakened and fell 6.5% on May 4, professional traders have been buying this drop in the past 24 hours. These actions by the arbitration bureau and whales are reflected in the ratio of long and short OKEx futures contracts, as well as in the margin lending markets of Bitfinex. While this purchase takes place, retailers remain largely silent, which is reflected in the neutral constant funding ratio.
USDT margin for futures contracts with 8 hours funding rate. Source: Bybt
As explained above, the rate of 8-hour perpetual forward swaps (reverse swaps) has been less than 0.05% over the past few weeks. For month-end contracts, prices differ significantly from conventional spot exchanges, reflecting the imbalance between long and short leverage.
This discrepancy is the reason why retailers prefer permanent futures contracts, albeit with different shipping costs due to changes in funding rates.
The current eight-hour fee corresponds to a weekly rate of 1%, which indicates a slight imbalance in height. However, this level is well below 0.10% and prices rose sharply in early April. This data strongly suggests that retailers are uncomfortable adding long trades in bitcoin despite a 9% correction in two days.
On the other hand, the Best Buy and Sell Traders Index hit its highest level in 30 days, indicating buying activity in whale offices and arbitrage. This indicator is calculated by analyzing the client’s consolidated position for spot, standing and futures contracts. As a result, it gives a clearer picture of whether professional traders are prone to rise or fall.
Best OKEx traders from long-haul to short-haul. Source: Bybt
As shown above, OKEx’s current long buy to sell ratio is currently 94% long. This buying activity started in the early morning of May 4th when Bitcoin dropped below $ 55,000. Most importantly, it indicates a lot of confidence since April 14, when BTC has steadily surged to $ 64,900.
However, to confirm if this move is widespread, it is also necessary to evaluate the margin markets. For example, a leading exchange (Bitfinex) has transferred over $ 1.8 billion in bitcoin positions.
BTC price (orange, left) compared to Bitfinex’s margin ratio is far to short (blue, right). Source: TradingView
Bitfinex has seen impressive growth in the BTC margin markets, which are more than 50 times longer than the amount borrowed from short positions. These levels are unmatched in the history of the exchange and are confirmed by data from the OKEx futures markets.
Undoubtedly, professional traders are very optimistic despite Bitcoin’s fall on May 4th. As for the lack of appetite on the part of retailers, it looks like they are currently focused on cryptocurrencies.
It currently has collected 18 of the top 50 altcoins 45% or higher in the last 30 days.
The question is, can the altcoin rally continue if BTC fails to hit a new all-time high in the next few weeks?