Over the past 48 hours, the price of Bitcoin (BTC) has fallen by $ 13,360, and futures contracts worth over $ 2.6 billion have been wound up. If we take altcoins into account, the total liquidation amount was 5.9 billion dollars.
After a record high interest of 19.5 billion dollars, on February 21, it decided 16.5 billion dollars. This means that half of the positions with expired leverage have been reopened.
According to traders from long to short and various financing price indices, retailers have been hardest hit.
Top retailers bought in the fall
The long and short position index is intended for large traders who use standardized client positions, including spot contracts, margins, standing contracts and futures contracts. Unlike futures or options indicators, this indicator provides a broader overview of the effective net position of professional traders.
Despite the discrepancies between cryptocurrency exchange methods, analysis of changes over time provides valuable insight.
On February 20, Huobi’s top retailers were long 0.81, preferring short 19%. By increasing its long net positions over the next 48 hours, the index peaked at 0.95, indicating a predominance of buying activity.
OKEx’s main buyers have been aggressive net buyers over the last three days. Starting with the 0.86 index in favor of 14% short, they managed to get him back 69% long.
In the end, the best Binance traders started at 1.36 and preferred pure buy positions, but were either wound up or pure short positions were taken until the current 1.23 level was reached. In any case, these traders have not added any trades in the last three days.
Overall, the average long-term sales position for large traders changed from 1.01 (unchanged) on 20 January to the current 1.37 in favor of net long. So it is clear that arbitration agencies and whales have increased the completion time in the settlement process.
The reduced financing rate shows that retail investors have cut their long positions.
If large traders are net buyers, retail must have the other end, even if it is through long-term liquidation.
To maintain a balanced exposure, derivatives exchanges charge a constant fee on futures (buyers) or card sales (sellers) every eight hours. This indicator, known as the financing rate, becomes positive when long trades require more leverage.
On the other hand, periods of fear and high sales activity lead to negative fluctuations in financing rates. This time, shorts pay off.
Since 6 February, the average weekly financing rate has exceeded 2.3%. This happened when bitcoin exceeded $ 38,000, indicating an over-leveraged retail purchase. On the other hand, large traders usually choose fixed calendar futures to avoid exorbitant financing fees during the rally.
This move completely disappeared on February 23 when the price of Bitcoin fell below $ 50,000. After some flirting with a negative financing rate, it is now about 0.5% per week. Metric signals indicate a sell-off of traders, bringing the index back to neutral levels.
While $ 50,000 seems like a psychological level, Bitcoin’s 67% gain since the beginning of the year is likely to continue to attract investors. The S & P 500’s modest performance of 3% and 0.6% yield on five-year US government bonds falls below the potential gains that can be achieved with cryptocurrencies.