Bitcoin price climbs to $19,000, but analyst says retest of $17,300 could come next

[ad_1]

The price of Bitcoin (BTC) has gained 15% in the past 13 days, and during this period, traders’ bearish bets on BTC futures have been liquidated for more than $530 million against the bulls.

After hitting $19,000 on January 12, Bitcoin hit its highest price since the collapse of the FTX exchange on November 8. The decision was largely fueled by expectations for the US consumer price index (CPI) for December, which matched consensus at 6.5% annually. -year-on-year, highlighting that inflationary pressure probably peaked at 9% in June.

Additionally, on Jan. 11, FTX attorney Andy Dietderich said $5 billion in cash and liquid cryptocurrencies had been recovered, fueling hopes of a partial return of client funds to the market. ‘coming. Addressing a US bankruptcy judge in Delaware on January 11, Dietderich said the company planned to sell $4.6 billion in non-core investments.

Let’s look at derivatives metrics to understand if professional traders are excited about Bitcoin’s rally to $19,000.

Margin utilization increased as Bitcoin price hit $18,300+

Margin markets provide insight into the position of professional traders, and margin is beneficial for some investors as it allows them to borrow cryptocurrency to leverage their positions.

For example, one can increase exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only sell the cryptocurrency because they are betting on its price falling. Unlike futures contracts, the balance between long and short margins is not always equal.

OKX stablecoin/BTC margin lending ratio. Source: OKX

The chart above shows that OKX’s trader margin lending ratio rose firmly on January 11, signaling that professional traders added leverage as Bitcoin rallied towards $18,300.

More importantly, the 2% correction that followed on January 12, which took Bitcoin to a low of $17,920, marked the full reversal of the margin, meaning that whales and market makers reduced their bullish positions using margin markets.

Currently at 21, the metric favors stablecoin borrowing by a wide margin, indicating that bears are not confident about opening Bitcoin margin shorts.

Futures traders ignored the Bitcoin price pump

The long-short metric excludes externalities that might have only affected margin markets. In addition, it gathers data from on-site exchange clients’ positions, perpetual and quarterly futures contracts, thus providing better insight into the positioning of professional traders.

There are sometimes methodological discrepancies between different exchanges, so readers should monitor changes rather than absolute numbers.

Top traders of bitcoin exchanges long-short ratio. Source: Coinglass

Even though Bitcoin broke above the $18,000 resistance, professional traders kept their leveraged long positions unchanged, according to the long-short indicator.

For example, the ratio for Binance traders remained firm at 1.08 from January 9 to January 12. Meanwhile, Huobi’s top traders reduced their leverage as the indicator fell from 1.09 to 0.91 currently. Finally, at crypto exchange OKX, the long-to-short rose slightly in favor of longs, from 0.95 on January 9 to 0.97 currently.

Traders using futures were not confident enough to add leveraged bullish positions despite rising prices.

Related: 13% of BTC Supply Returns to Profit as Bitcoin Sees “Massive” Accumulation

Bitcoin price could retest $17,300

While the margin data shows that considerable leverage was used to push Bitcoin above $18,000, this suggests that the situation was only temporary. Most likely, these professional traders deposited more margin and consequently reduced their leverage after the event. Essentially, the metric looks very healthy as it indicates that margin markets are not overbought.

When it comes to top long-to-short traders, the lack of demand for leveraged longs using futures is somewhat concerning, but at the same time it leaves room for buying power. additional.

From a derivatives perspective, even if Bitcoin retests $17,300, bulls shouldn’t worry as derivatives indicators show little demand from short sellers and no excessive leverage from buyers. .

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed herein are the sole authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

[ad_2]