Bitcoin (BTC) rallied on the back of the US Federal Reserve’s decision to raise interest rates on July 27. Investors interpreted Federal Reserve Chairman Jeremy Powell’s statement as more dovish than the previous FOMC committee meeting, suggesting that the worst time for tight economic policies is behind us.
Other positive news for risk assets came from the US Personal Consumption Expenditures (PCE) Price Index, which rose 6.8% in June. The move was the biggest since January 1982, reducing incentives for fixed-income investments. The Federal Reserve focuses on PCE because of its broader measure of inflationary pressures, measuring changes in the prices of goods and services consumed by the general public.
Other positive news came from Amazon after the e-commerce giant reported that its quarterly financial results beat estimated revenue of $119.5 billion by 1.4%. Additionally, Apple released its Q2 results on the same day, matching analysts’ revenue estimates, while posting earnings 3.4% above market consensus.
Major traders have increased their bullish bets
The data provided by Exchange highlights the net long short positioning of traders. By analyzing each client’s position on the moment, futures and perpetual contracts, you can better understand whether professional traders are leaning bullish or bearish.
There are occasional discrepancies in methodologies between different exchanges, so viewers should monitor changes rather than absolute numbers.
Exchanges top traders Bitcoin long to short ratio. Source: Coinglass
Despite Bitcoin’s 14% correction from July 20-26, major traders Binance, Huobi, and OKEx have increased their leverage longs. To be more precise, Binance was the only exchange to face a modest reduction in the long-short ratio of major traders, going from 1.22 to 1.20.
However, this impact was more than offset by OKEx traders increasing their bullish bets from 0.66 to 1.17 in six days. The absence of panic selling after Bitcoin failed to break $24,000 support on July 20 should be interpreted as bullish.
Had the buyers been using excessive leverage or wary of a potential upside, the price move would have done great damage to the long-to-short relationship.
Related: 3 Bitcoin Trading Behaviors Hint That BTC’s Rebound To $24K Is A ‘Fake’
Margin traders are unwilling to make bearish bets
Margin trading allows investors to borrow cryptocurrencies to leverage their trading position and thus increase returns. For example, one can buy Bitcoin by borrowing Tether (USDT), thus increasing their crypto exposure. On the other hand, borrowing Bitcoin can only be used to short sell it, betting on the price decline.
Unlike futures contracts, the balance between long and short spreads does not necessarily coincide. When the Margin Lending Ratio is high, it indicates that the market is bullish; the opposite, a low loan ratio, indicates that the market is bearish.
OKX USDT/BTC Margin Lending Index. Source: OKEx
The chart above shows that investor morale bottomed out on July 21 when the ratio hit its lowest level in four months at 8.6. From then on, OKX traders put in less demand to borrow Bitcoin, exclusively used to bet on the price downtrend. The ratio currently stands at 13.8, which is skewed to the upside in absolute terms as it favors stablecoin lending by a wide margin.
Derivatives data shows no stress from professional traders, even as Bitcoin traded below $21,000 on July 26. Unlike retail traders, these seasoned whales know when to hang on to their conviction and this attitude was clearly reflected in the healthy derivatives data. The data suggests that traders expecting a strong market correction if Bitcoin fails to break the $24,000 resistance will be disappointed.
The views and opinions expressed herein are solely those of the Author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should do your own research when making a decision.
This post Bitcoin struggles to turn $24K into support, but data shows pro traders racking up sats
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