Bitcoin (BTC) investors appear to be worried about growing speculation that the Evergrande Group, China’s second largest property developer, will default on its $ 300 billion debt. These concerns are evident in global equity markets, which are down 1.5-3% on the open market this morning.
Despite the price movement, the flow of BTC (net withdrawals) from stock exchanges continued for several months, especially on Coinbase Pro.
Traders also know that each exchange has its own user profile. For example, byte filters tend to be more stringent compared to FTX, which is known for more conservative clients.
Take, for example, Tuesday’s fall below $ 43,000, leading to the $ 1 billion in contracts led by Bybit that were closed despite $ 2.34 billion in open interest rates on futures. That figure is lower than Binance’s $ 3.66 billion and $ 2.51 billion on FTX liquidation.
Liquidation of bitcoin futures in 24 hours, September 20th. Source: Bybt.com
The data above shows that Bybit traders are more risk averse and tend to use more leverage. Meanwhile, derivatives investors Binance and FTX were relatively less affected by the daily negative move of 11%.
Professional traders remain neutral on price increases
To understand how professional traders tend to be bullish or bearish, it is necessary to analyze the futures premium (or base price). This indicator measures the difference between long-term futures contracts and the current level of the spot market.
In healthy markets, the annual premium is expected to be between 5% and 15%, in a situation called contango. This price gap occurs because sellers demand more money to defer settlement for a longer period of time.
A red signal appears when this indicator goes out or becomes negative, which is called “reverse”.
Annually for 3 month bitcoin futures. Source: Laevitas.ch
As shown above, the current annual premium of 7% is neutral, but in line with the previous month’s average. If professional traders were to show anxiety or bearish sentiment, this indicator would fall below 5%.
The relationship between long-term traders and short selling shows the buying activity of leading traders.
Investors should monitor the relationship between long and short positions between large traders on leading cryptocurrency exchanges to measure how accurately they find professional traders. This calculation provides a complete overview of traders’ net effective position by collecting data from multiple futures and margin markets.
OKEx and Binance are large bitcoin traders who have a long or short relationship. Source: Bybt
It’s worth noting that each exchange collects data on top traders differently because there are several ways to measure net customer exposure. Therefore, any comparison between multiple suppliers should be based on percentage changes, not absolute numbers.
The long to short ratio of the best traders on OKEx increased from 8% in favor of long positions to 54% at the moment, which is the highest level in 10 days. On the other hand, Binance derivatives traders have maintained a stable 10% in favor of long positions despite the bitcoin price correction.
Both data confirm that retailers are more likely to be hit by higher influence positions. Meanwhile, professional traders held their positions or took advantage of the discounted price to add long positions.