A Report On The Pro Traders Unfazed By Bitcoin Price That Is Stalling At $12,400
As bitcoin prices stall, the traders are rock solid on the investments. Read all about it and get to know more. How are the traders faring with the current price swings of bitcoin?
All About Bitcoin Price Range
Pro traders remain strongly bullish on Bitcoin despite the recent rejection at $12,400 as derivatives and other key metrics show.
Triggering $234 million in futures contract liquidations across derivatives exchanges, was bitcoin’s recent rejection at $12,400. Maintaining the $11,700 level as support is undecided despite a 30% rally in the past 30 days.
Ever since the mid- March 50% shakedown causing the price to test the sub-$ 4000 levels, Bitcoin hasn’t seen a lower low.
Although a clear uptrend has been present, surely there have been ups and downs over the past there weeks. After a $1,400 crash that liquidated $1 billion in futures contracts, traders’ sentiment certainly wasn’t positive on Aug 2.
Especially when presenting a negative outcome, it's natural for the human mind to give more relevance to recent events.
When facing such large unexpected red candles during more extended timeframe uptrends, traders using leverage will undoubtedly have a more agonising experience.
The Measuring Of Leverage By Funding Rate
Reflected in the funding rate is excessive leverage from buyers. Also know as inverse swaps, having an embedded fee for margin usage is because of the perpetual futures contract.
They ensure that there are no exchange risk overexposure imbalances as the funding rates are usually changed every 8 hours.
The funding rate will be positive and buyers will pay if buyers are using more leverage than sellers. When future contracts sellers are the ones demanding more margin, the opposite occurs.
The funding rate was relatively calm during the next seven days after a brief positive spike on August 10. As the indicator reached 0.10% equivalent to 2% per week, this trend changed earlier this week.
It does signal that buyers are the ones using more leverage as this doesn’t necessarily translate to bullish investors.
Why Options Markets Show Few Signs Of Stress?
It can either be calculated by the historical prices or by the options market pricing known as implied volatility as it is the main gauge of price oscillations. Implied volatility measures the present scenario meaning that it comes regardless of the daily swings of the past week or month.
Meaning $11,000-$13,000 ones at the present moment, only those Bitcoin options with the strikes closest to current underlying market levels are used. Used for the implied volatility calculation these are known as at-the-money options.
Over the past 48 hours, take notice of how the indicator barely moved. Had the market experienced a sudden $2,000 drop, that certainly wouldn’t be the case. Rathe than a trend changing market move, this reinforces the thesis of the current Bitcoin correction being a healthy pullback.
The Top Traders Remain Net-Long
Allowing one to determine whether professional traders are leaning bullish or bearish, the exchange provided data highlights traders’ long-to-short net positioning.
It provides a clear enough view of top traders’ net exposure despite discrepancies in methodologies where viewers will be able to monitor changes in this index.
Not even the sharp $1,500 Bitcoin price drop on Aug 2, was able to shift the bullish position as overall, the traders at Binance and OKEx has held net long exposure since July 27.
After the US Federal Reserve reportedly considered not raising interest rates until inflation hits 2%, analysts became even more bullish on Bitcoin.
As Volumes Remain Strong
Especially after strong price movements, volume changes provide insight on increasing and diminishing activity.
As total market capitalisation drifted sideways near $ 260 billion from mid- May until late July when it finally broke the $280 billion resistance, the trading volume within the entire crypto market faced a downtrend.
The current 10-day average volume is an indicator of a healthy market trend, although it is yet to be seen if the recent total market cap holds the $360 billion level.
As both perpetual contract funding and implied volatility indicators remain healthy, there seems to be no signal of stress both in Bitcoin futures and options.
The net exposure of top traders’ points to unfazed bullish momentum while there is not a single indicator or analysis that provides certainly over short-term price movements.
Traders will not be heavily impacted by natural price swings that will occur even during long and questionably bullish markets by avoiding excessive leverage.
Finally, The Conclusion
As we wind up, daily news reports are coming on the effect of the Covid-19 pandemic on the price swings of Bitcoin that is surely maturing the coin. With more insight on the current market cap of the currency, investors, as well as traders, can be sure of a promising future for the bitcoin investments.