Bitcoin open interest soars to 1-year high as BTC price rallies toward $68K

October 15, 2024 Coin Telegraph

Bitcoin stagnates as bearish headwinds continue to blow

August 15, 2024 Coin Telegraph

Bitcoin bulls were obliterated, but is it time to catch the falling knife?

August 5, 2024 Coin Telegraph

Call

Bitcoin derivatives show traders’ morale is low, weakening the odds of a 20% rise from the $49,320 BTC bottom.

Bitcoin (BTC) price crashed 19% on Aug. 5, reaching its lowest level in almost six months at $49,320. The sell-off caused the Bitcoin futures premium, considered the best proxy for derivatives traders’ optimism, to hit its lowest levels in three months. Traders are now debating whether Bitcoin prices below $53,000 represent a golden opportunity or if the risk of another drop below $47,000 is too high.

To gauge the impact of the recent price crash, one should begin by analyzing the Bitcoin futures markets. Unlike perpetual contracts, which typically settle every eight hours, BTC monthly futures carry an embedded cost due to their longer settlement period. Sellers generally demand a 5% to 10% annualized premium relative to regular Bitcoin spot markets to compensate for this issue. In summary, premiums below 5% signal pessimism.

The annualized Bitcoin futures premium (basis rate) fell to 5.5% on Aug. 5, its lowest level in three months, a sharp drop from the previous week when the indicator peaked at 12%. More notably, when the futures premium bottomed at 5% on May 2, it followed a 15% weekly Bitcoin price decline from $66,600 to $56,200. In May, Bitcoin’s price rebounded by 13% in the three days following the crash, but the current situation differs significantly.

Bitcoin drops below $54K as crypto liquidations near $665M

July 5, 2024 Coin Telegraph

Can SOL reclaim $170? Two indicators scream ‘buy’

June 11, 2024 Coin Telegraph

<div>Can SOL reclaim 0? Two indicators scream 'buy'</div>

Arbitrum

SOL derivatives and the Solana network have remained stable, indicating that traders and users are not ready to give up.

Solana's native token, SOL (SOL), hit a four-week low on June 11 as it tested the $145 support level. Within four days, SOL underwent a sharp 15.8% decline, underperforming the broader cryptocurrency market, which saw a 10% drop in total capitalization during the same period. Despite this, the macroeconomic instability may have created a buying opportunity for SOL, according to two key indicators.

Investors are concerned that the stock market may correct itself following mixed economic signals, prompting the United States Federal Reserve (Fed) to delay interest rate cuts. The CME FedWatch tool indicates that traders now see a 48% chance of rates staying the same until September, a significant increase from 39% a month ago. After reaching a record high on June 7, the S&P 500 index has plateaued, with investors awaiting remarks from Fed Chair Jerome Powell on June 12.

Stuart Kaiser, Citigroup’s head of U.S. equity trading strategy, suggests that a Consumer Price Index (CPI) increase above 0.4% compared to the previous month could trigger a broad market selloff, potentially dropping the S&P 500 by 1.5% to 2.5%, as reported by Yahoo Finance. Kaiser also cautioned that the S&P 500 might experience its largest single-day movement since March 2023. The U.S. inflation data, scheduled for release on June 12, is keenly anticipated ahead of the Fed's rate decision.

Bitcoin futures open interest at 2023 high while BTC trading volume at yearly low — What gives?

August 11, 2023 Coin Telegraph

Binance

BTC futures open interest is on the rise, but Bitcoin trading volume suggests that traders have shifted their attention to other markets.

Bitcoin (BTC) traders are currently not pleased with the recent price trends, especially due to the inability of its price to surpass the $30,500 mark over the last four weeks. This frustration is compounded by the fact that several requests for spot Bitcoin exchange-traded funds (ETFs) are either being delayed or pending review from regulators.

Interestingly, there has been a noticeable uptick in the open interest of Bitcoin's futures contracts, which likely indicates increased demand from institutional traders. On the other hand, activity in the derivatives markets has been lackluster. This contrast in market dynamics has led to a mixed sentiment among investors, making it challenging to gather enough momentum for trading at or above the $31,000 level.

*Bitcoin 1-day price index, USD. Source:* *TradingView*

The main factor cited by many analysts for the lack of buyers driving Bitcoin above the $30,000 mark is the reports surrounding the United States Department of Justice considering fraud charges against Binance. Additionally, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) currently have their own legal actions against the exchange and its founder, Changpeng “CZ” Zhao.

Macroeconomic forces partially explain Bitcoin investors’ discomfort

Taking a broader view of the situation, there is an added concern regarding the potential global economic recession triggered by the efforts of central banks to control inflation. The most recent U.S. core Consumer Price Inflation (CPI) figures, which exclude food and gas prices, saw a 4.7% rise compared to the previous year, following a 4.6% increase in June. This data supports the ongoing initiatives to tighten the economy, favoring investments in fixed income, short-term bonds and cash positions.

As a result, despite the consensus projecting the Federal Reserve to maintain the interest rate cap at 5.5% during the upcoming September meeting, investors lack the motivation to increase their positions in risk-on markets. This reluctance stems from the growing likelihood of a recession, evident through the 1.4% decline in Eurozone retail sales year-over-year in June and the U.S. ISM Manufacturing PMI registering at 46.4 in July, which indicates a state of contraction.

When examining the price as an indicator, it becomes apparent that Bitcoin investors are currently not displaying significant confidence in the likelihood of a near-term approval for a spot ETF. At the same time, there is a notable sense of pessimism surrounding the ongoing legal challenges faced by Binance and the potential repercussions of these challenges. Irrespective of the specific reason, the overall trend of Bitcoin's price over the past 50 days has been predominantly negative, with frequent visits near the $29,000 support level.

Bitcoin derivatives are extremely important for price guidance

The Bitcoin futures market holds immense importance within the trading landscape. This market encompasses cryptocurrency-exclusive derivatives exchanges like Binance, Bybit, and OKX, as well as established traditional financial platforms such as the Chicago CME exchange. In essence, futures contracts are financial agreements between two parties, wherein actual BTC doesn't change hands. However, the appeal of leverage enables this market to surpass the trading volumes typically seen in regular buying and selling.

*Bitcoin futures aggregate open interest, USD. Source: Coinglass*

According to data from Coinglass, on August 8, trading activity within this market surged to approximately $14.5 billion, approaching levels reminiscent of those observed back in May 2022. It could be argued that these contracts are continuously balanced between buyers (longs) and sellers (shorts). However, the expansion of this market allows larger-scale investors to participate and attracts traders employing various strategies, including "cash and carry" approaches and miners seeking risk mitigation.

Nevertheless, the growing number of active contracts, as evident from open interest, does not necessarily equate to increased trading activity within the futures market. In reality, the volume associated with Bitcoin futures has experienced a downward trajectory over the past seven months.

*Bitcoin futures aggregate volume, USD. Source: Coinalyze.net*

Recent data points out that trading volumes for BTC futures have dropped to their lowest levels since December 2022, averaging below $7 billion per day. This suggests that traders are either fully protected against risks and not inclined to make further moves at the current price levels, or they have shifted their focus to other markets with higher volatility or better odds of significant changes.

The situation boils down to this: until there's some clear confirmation about the ETF decision and more defined rules about exchanges like Binance and Coinbase due to their clashes with regulators, traders using Bitcoin derivatives don't seem to have much motivation to make more trades. These significant events, combined with the uncertainty in the broader economy, provide an explanation for the reduced trading activities, even though more people are keeping an eye on the situation and the price is stuck around $29,500.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin price is down, but data signals that $30K and above is the path of least resistance

July 25, 2023 Coin Telegraph

Bitcoin price is down, but data signals that K and above is the path of least resistance

Coin Telegraph

Even with a price correction to $29,000, several Bitcoin price metrics show traders casting bets on a quick rebound.

On July 24, Bitcoin (BTC) experienced a flash crash, plummeting to $29,000 in a movement now attributed to significant BTC holders potentially liquidating their positions.

Amidst the crash and market uncertainty, Bitcoin's three major trading metrics continue to project a bullish outlook, signifying that professional traders have not reduced their leverage longs through the use of margin and derivatives.

Analytics firm Glassnode reported a surge in whales' inflow to exchanges, reaching its highest level in over three years at 41% of the total. This forceful sell-off from whales alarmed investors, especially in light of the absence of any significant negative events impacting Bitcoin in the past month.

Notably, a major concern stems from the ongoing court cases by the U.S. Securities and Exchange Commission (SEC) against leading exchanges, Binance and Coinbase. Still, there hasn’t been any major advancement on those cases, which will likely take years to settle.

Bitcoin’s price crash might have been related to the U.S. dollar reversion

Despite historical volatility, Bitcoin’s crash became more pronounced following 33 consecutive days of trading within a tight 5.7% daily range. The movement is further accentuated by the S&P 500 gaining 0.4%, crude oil rising by 2.4%, and the MSCI China stock market index surging by 2.2%.

However, it is essential to consider that the world's largest global reserve asset, gold, experienced a dip of 0.5% on July 24. Furthermore, the dollar strength index (DXY) reversed its two-month-long trend of devaluation against competing fiat currencies, climbing from 99.7 to 101.4 between July 18 and July 24.

*U.S. dollar strength index (DXY). Source: TradingView*

The DXY index measures the strength of the U.S. dollar against a basket of foreign currencies, including the U.K. Pound, Euro, Japanese Yen, Swiss Franc and others. If investors believe that the U.S. Fed will manage a soft landing successfully, it makes sense to reduce exposure to gold and Bitcoin while increasing positions in the stock market. Lower odds of a recession can positively impact corporate earnings.

Margin and derivatives markets show resolute professional traders

To understand whether Bitcoin’s price move down to $29,000 has successfully ruptured the market structure, one should analyze margin and derivatives markets. Margin trading allows investors to leverage their positions by borrowing stablecoins and using the proceeds to buy more cryptocurrency.

*OKX stablecoin/BTC margin lending ratio. Source: OKX*

The margin lending of OKX traders based on the stablecoin/BTC ratio rose between July 22 and July 24, suggesting that professional traders added leveraged long positions despite the recent price crash.

Traders should corroborate this data with derivatives to ensure its market-wide impact. In healthy markets, BTC futures contracts typically trade at a 5 to 10% annualized premium, known as contango, which is not exclusive to crypto.

*Bitcoin 2-month futures annualized premium. Source: Laevitas*

Notice how the indicator sustained a healthy 5.7% average annualized premium, slightly lower than two days prior but still within the neutral range. This data confirms the resilience of margin markets, but to gauge market sentiment further it’s also helpful to look at the options markets.

The 25% delta skew can reveal when arbitrage desks and market makers charge higher prices for protection against upside or downside movements. In short, a skew metric rising above 7% suggests traders anticipate a drop in Bitcoin's price, while periods of excitement generally yield a negative 7% skew.

*Bitcoin 30-day options 25% delta skew. Source: Laevitas*

The 25% delta skew remained negative, indicating that bullish call options were trading at a premium compared to protective puts. This further supports the thesis that professional traders remain unfazed by the flash crash, with no evidence indicating pessimism among whales and market makers.

The path to $30,000 and above shows the least resistance

All factors considered, irrespective of the rationale behind the price move on July 24, Bitcoin bears could not dampen investor optimism, resulting in higher odds of a recovery above $30,000 in the short term. Notably, the mere appreciation of the U.S. dollar does not impact Bitcoin's predictable monetary policy, censorship resistance and autonomous nature as a means of payment.

On the brighter side, there are some positive triggers on the horizon, including the possible approval of a spot Bitcoin ETF and gaining regulatory clarity. Proof of this comes from a recent U.S. bill introduced on July 20 that seeks to establish a clear process for determining the classification of digital assets as commodities or securities. If the bill becomes law, it would give the Commodity Futures Trading Commission (CFTC) authority over digital commodities.

Will $30K be a new springboard for Bitcoin bulls?

June 27, 2023 Coin Telegraph

Will K be a new springboard for Bitcoin bulls?

Binance

Bitcoin margin and futures markets display strength as institutional appetite surges after multiple spot ETF requests.

After a failed rally above $31,000 on June 23, Bitcoin (BTC) has sustained the $30,300 resistance for the past three days. Curiously, this happened while gold reached its lowest level in three months, trading at $1,910 on June 22, down from a $2,050 peak in early May.

Investors now question how solid Bitcoin’s $30,000 support is. So analyzing what caused the recent price rally is essential to understanding how traders are positioned on BTC margin and futures markets.

Why did BTC price break above $30,000?

Some analysts attribute Bitcoin’s recent 21.5% gains in 11 days to BlackRock’s spot Bitcoin exchange-traded fund (ETF) filing. But other events might have fueled the cryptocurrency gains. For instance, on June 26, HSBC Bank in Hong Kong reportedly introduced its first local cryptocurrency services using three listed crypto ETFs.

Moreover, the ProShares Bitcoin Strategy ETF, a Bitcoin futures fund, experienced its largest weekly inflow in a year at $65 million, with its assets topping $1 billion. It was the first BTC-linked ETF in the United States and is one of the most popular among institutional investors.

But, more importantly, the U.S. crypto regulatory environment may be improving after a period marked by enforcement actions from the Securities and Exchange Commission (SEC) aimed at exchanges supposedly operating as unregistered securities brokers.

On June 25, Federal Reserve governor Michelle Bowman said that financial institutions had been left in a “supervisory void” in terms of emerging technologies, including digital assets. Bowman added that policymakers have been relying on “general but non-binding statements,“ leaving substantial uncertainty and imposing new business requirements after significant investments have been made.

In that sense, a draft bill in the U.S. House of Representatives aims to prohibit the SEC from denying digital asset trading platforms registration as a regulated alternative trading system. Published on June 2, the proposed legislation would allow such firms to offer “digital commodities and payment stablecoins.“

Bitcoin margin, futures suggest bullishness

Now let’s look at Bitcoin derivatives metrics to better understand how professional traders are positioned amid improved regulatory perspectives and a sizable institutional inflow.

Margin markets provide insight into how professional traders are positioned because they allow investors to borrow cryptocurrency to leverage their positions.

OKX, for instance, provides a margin-lending indicator based on the stablecoin/BTC ratio. Traders can increase their exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only bet on the decline of a cryptocurrency’s price.

The above chart shows that OKX traders’ margin-lending ratio bottomed at 17 on June 20 but has improved over the past four days. The movement indicates a prevalence of margin longs as the present 24x ratio favors bullish stablecoin lending.

Still, investors should analyze the Bitcoin futures long-to-short metric, which excludes externalities that might have solely impacted the margin markets.

*Exchanges’ top traders Bitcoin long-to-short ratio. Source: CoinGlass*

There are occasional methodological discrepancies between exchanges, so readers should monitor changes instead of absolute figures.

Top traders at Huobi vastly increased their longs between June 22 and June 24 as Bitcoin price broke above the $30,000 resistance.

On the other hand, OXK’s top traders initially increased their shorts on June 22 and June 23, but subsequently reverted their positions by adding bullish bets.

Lastly, the top traders at Binance started adding longs on June 21 and have kept increasing bullish positions until June 23.

Bitcoin’s $30,000 support showing strength

Overall, Bitcoin bulls have added leverage-long positions using margin and futures markets backed by the positive momentum from multiple spot Bitcoin ETF requests, heavy institutional inflow and a more rational approach from U.S. lawmakers.

The SEC’s regulation-by-enforcement approach is not backed by some U.S. Federal Reserve governors and has faced some serious backlash in the U.S. House of Representatives. For example, Representative Warren Davidson has introduced the SEC Stabilization Act, citing “ongoing abuse of power” and demanding the removal of Gary Gensler as chair of the SEC.

Given the favorable scenario toward cryptocurrencies, Bitcoin bulls should now have the upper hand to sustain the $30,000 BTC price support level in the coming weeks.

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.

Bitcoin price rallies to $19K, but analyst says a $17.3K retest could happen next

January 12, 2023 Coin Telegraph

Bitcoin price rallies to K, but analyst says a .3K retest could happen next

Coin Telegraph

Bitcoin price hit a year-to-date high near $19,000 as pro traders used leverage to propel the pump, but derivatives data hints at reasons for BTC price to retest $17,300.

Bitcoin (BTC) price has gained 15% in the past 13 days, and during this timeframe, traders’ bearish bets in BTC futures were liquidated in excess of $530 million compared to bulls.

After rallying to $19,000 on Jan. 12, Bitcoin reached its highest price since the FTX exchange collapse on Nov. 8. The move was largely fueled by the United States Consumer Price Index (CPI) expectation for December, which matched consensus at 6.5% year-over-year — highlighting that the inflationary pressure likely peaked at 9% in June.

Furthermore, on Jan. 11, FTX attorney Andy Dietderich said $5 billion in cash and liquid cryptocurrencies had been recovered — fueling hopes of partial return of customer funds in the future. Speaking to a U.S. bankruptcy judge in Delaware on Jan. 11, Dietderich stated that the company plans to sell $4.6 billion of non-strategic investments.

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

Margin use increased as Bitcoin price rallied to $18,300 and above

Margin markets provide insight into how professional traders are positioned, and margin is beneficial to some investors because it allows them to borrow cryptocurrency to leverage their positions.

For instance, one can increase exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price declining. Unlike futures contracts, the balance between margin longs and shorts isn’t always matched.

The above chart shows that OKX traders’ margin lending ratio firmly increased on Jan. 11, signaling that professional traders added leverage longs as Bitcoin rallied toward $18,300.

More importantly, the subsequent 2% correction on Jan. 12 that led Bitcoin to a $17,920 low marked the complete margin reversal, meaning whales and market makers reduced their bullish positions using margin markets.

Presently 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-to-short metric excludes externalities that might have solely impacted the margin markets. In addition, it gathers data from exchange clients’ positions on the spot, perpetual and quarterly futures contracts, thus offering better information on how professional traders are positioned.

There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.

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

For instance, the ratio for Binance traders stood firm at 1.08 from Jan. 9 until Jan. 12. Meanwhile, top traders at Huobi reduced their leverage longs as the indicator moved from 1.09 to the present 0.91. Lastly, at crypto exchange OKX, the long-to-short slightly increased favoring longs, moving from 0.95 on Jan. 9 to the current 0.97.

Traders using futures contracts were not confident enough to add leveraged bullish positions despite the price increase.

Bitcoin price could retest $17,300

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

As for the top trader’s long-to-short, the absence of demand for leverage longs using futures contracts is somewhat concerning, but at the same time, it leaves room for additional purchasing power.

From a derivatives standpoint, even if Bitcoin retests $17,300, the bulls should not be concerned because the 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 here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

2 key Ethereum price indicators point to traders opening long positions

October 17, 2022 Coin Telegraph

bnb

Ether price is still at risk of falling below $1,000, but data points to traders opening fresh long positions.

Ether (ETH) price has been unable to close above $1,400 for the past 29 days and it has been trading in a relatively tight $150 range. At the moment, the $1,250 support and the $1,400 resistance seem difficult to break, but two months ago, Ether was trading at $2,000. The current price range for Ether simply reflects how volatile cryptocurrencies can be.

From one side, investors are calm as Ether trades 50% above the $880 intraday low on June 18. However, the price is still down 65% year-to-date despite the most exciting upgrade in the network's sev-year history.

More importantly, Ethereum's biggest rival, BNB Chain , suffered a cross-chain security exploit on Oct. 6. The $568 million exploit caused BNB Chain to temporarily suspend all transactions on the network, which holds $5.4 billion in smart contracts deposits.

Ether underperformed competing smart contracts like BNB, Cardano (ADA), and Solana (SOL) by 14% since September, even though its TVL in ETH terms increased by 9% during the period. This suggests that the Ethereum network's issues, such as the $3 average transaction fees, weighed on the ETH price.

*Ether vs. MATIC, SOL, BNB: Source: TradingView*

Traders should look at Ether's derivatives markets data to understand how whales and market makers are positioned.

Options traders remain moderately risk-averse

The 25% delta skew is a telling sign whenever professional traders overcharge for upside or downside protection. For example, if traders expected an Ether price crash, the options markets skew indicator would move above 12%. On the other hand, generalized excitement reflects a negative 12% skew.

*Ether 60-day options 25% delta skew: Source: Laevitas.ch*

In layperson's terms, the higher the index, the less inclined traders are to offer downside risk protection. The indicator has been signaling fear since Sept. 19, when it last held a value below 10%. That day marked the temporary bottom of a 28% weekly correction, as the $1,250 support strengthened after such a test.

Long-to-short data show traders adding longs

The top traders' long-to-short net ratio excludes externalities that might have solely impacted the options markets. By aggregating the positions on the spot, perpetual and quarterly futures contracts, one can better understand whether professional traders are leaning bullish or bearish.

There are occasional methodological discrepancies between different exchanges, so viewers should monitor changes instead of absolute figures.

*Exchanges' top traders Ether long-to-short ratio. Source: Coinglass*

Binance displayed a modest increase in its long-to-short ratio between Oct. 13 and 17, as the indicator moved from 1.04 to 1.07 in those four days. Thus, those traders slightly increased their bullish bets.

Huobi data shows a stable pattern as the long-to-short indicator stayed near 0.98 the whole time. Lastly, at OKX exchange, the metric plunged to 0.72 on Oct. 13, largely favoring shorts only to rebound to the current 1.00.

On average, according to the long-to-short indicator, the top traders from those three exchanges have been increasing long positions since the $1,200 support test on Oct. 13.

Skew and leverage are critical to sustaining the $1,250 support

There was no significant improvement in pro traders' derivatives positions despite Ether gaining 12% since the Oct. 13 crash down to $1,185. Moreover, options traders fear that a move below $1,250 remains feasible, considering the skew indicator remains above the 10% threshold.

If these whales and market makers had firm convictions of a sharp price correction, that would have been reflected in the exchange top traders' long-to-short ratio.

Investors should closely monitor both metrics. The 25% delta skew should remain at 18%, and the long-to-short ratio above 0.80 to sustain the $1,250 support strength. These indicators are a telling sign of whether the bearish sentiment from top traders is gaining momentum.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

longs