Bitcoin Futures Traders Cautious As BTC Rises 25% In One Week

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Source: Adobe / sergey_p

Bitcoin (BTC) futures traders are turning somewhat bearish on the number one cryptocurrency, again favoring short positions over long positions, according to data from the OKEx crypto exchange. However, traders on the rival Binance exchange were less pessimistic about the coin’s near-term outlook.

According to an OKEx futures market report released on Friday, the ratio of long positions to short positions in its bitcoin futures market has been declining since late September, trending upward through most of August and September.

The uptrend in the long / short ratio has given bitcoin “decent support which has kept it afloat despite significant selling pressure,” OKEx wrote of the previous two months, adding that the uptrend has continued. is now discontinued, which means that retail traders increasingly prefer shorts to longs.

Source: OKEx

In futures trading, a short position is a bet that the price of the underlying asset will fall, while a long position is a bet that it will increase. A rising long / short ratio therefore indicates increasing price optimism, while a falling ratio suggests that traders are becoming pessimistic.

“As of this writing, the long / short ratio is around 0.90, struggling to recover 1.0 from the start of October. This shows us that retail traders are betting against the rapid rise in bitcoin , potentially because the market leader has already grown by nearly 30% since the start of the month, ”according to OKEx.

Their report’s findings were also partially supported by data from Binance, which showed that the long / short ratio in their bitcoin futures market has declined since late September. Since October 1, however, Binance’s long / short ratio has risen slightly again and currently stands at 1.12.

Compared to the OKEx ratio of 0.90, Binance data means futures traders on Binance were significantly more bullish on bitcoin than OKEx traders.

Source: Binance

Meanwhile, in support of the somewhat bearish angle of OKEx’s commentary, there was also variable-maturity futures price data on the exchange.

In bullish market conditions, price premiums on futures contracts should normally be higher the longer a contract expires, a situation known as contango.

According to the exchange, however, the price premiums on futures contracts expiring in December of this year and March of next year were only slightly higher today compared to Friday last week, which, according to her, “does not necessarily paint a very positive picture from a retail perspective.”

“Since these premiums are relatively small, we can infer that retail investors are approaching this potential second stage of the bull run very cautiously,” OKEx’s Hunain Naseer wrote in the futures report.

At the time of writing, OKEx’s quarterly bitcoin futures contract, which expires in December of this year, was trading at $ 56,721. The price gives a bounty to the spot of around $ 1,330, which is “slightly higher” than last week’s premium of $ 950.

Likewise, the March 2021 contract was trading at $ 58,355, with a premium of over $ 3,000, which OKEx said is “not significantly higher than last week’s $ 1,900.” .

Bitcoin has risen more than 1% in the past 24 hours at 3:10 p.m. UTC on Friday, trading at $ 54,664. The price has risen 25% in the past 7 days, after crossing the $ 55,000 mark on Wednesday. Earlier today, BTC also briefly touched $ 56,000 .____ Read more: SEC approves Bitcoin-linked ETF as market waits for ‘real’ BTC ETF – Institutions switch from Bitcoin to Ethereum Futures, according to JPMorgan

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