Bitcoin (BTC) price rose 25% after news of Tesla’s $ 1.5 billion BTC investment was released this week. Before this revelation, BTC lagged 7.5% behind Ether (ETH), but the numerous bullish events of the past few days pushed BTC to a new all-time high of $ 48,900.
Prior to Tesla’s announcement, BTC price traded in the $ 30,000- $ 41,500 range for almost three weeks, and once the price broke out, one would expect pro traders and arbitrage desks to follow the uptrend.
Rather than long freaking out, many of the top traders opened short positions when BTC began its 25% move. This seems risky as Bitcoin received praise from JPMorgan’s co-president this week and regulators approve approval of the BTC ETF in Canada.
Bitcoin and Ether USD prices at Bitstamp. Source: NYDIG Digital Assets Data
Historical data shows that Bitcoin price action tends to trade alongside Ether, which has been heavily bullish for months. In addition to this bullish scenario, Bitcoin’s Lightning Network announced a record number of nodes and the Total Locked Data Value (TVL) exceeded $ 42 million.
Mastercard also announced it would support cryptocurrency payments on its network until the end of 2021.
These bullish signals are in contrast to the long-to-short net positioning metrics provided by major cryptocurrency exchanges.
This indicator is calculated by analyzing the local client’s consolidated position, perpetual contracts and futures contracts. It provides a clearer view of whether professional traders are bullish or bearish.
It is important to note that there are occasional discrepancies in methodology between different exchanges, so viewers should monitor changes rather than absolute numbers.
BTC long-to-short ratio of Exchange’s top traders. Source: Bybt.com
Since February 8, when the Tesla announcement was made, the exchanges’ top traders have kept their net positions relatively unchanged.
Prior to Bitcoin’s 25% rally, Binance had odds of 1.33 favoring longs, which is in line with the previous week. This indicator peaked at 1.53 on February 10, but has since returned to 1.31.
On the flip side, Huobi’s top traders had an indicator of 0.74 prior to Feb. 8, which was flat for three days. On February 11th, when BTC rose from $ 44,000 to $ 48,000, these traders began increasing net long positions, hitting the current 0.80. While this level is still favoring net short positions by 20%, it remains above the 0.75 level seen on January 29th.
After all, OKEx’s top traders were net long 14% before the Tesla News released. Although they returned to a net short position of 47% on the same day, the indicator has returned to 1.03 in the past four days. Currently, OKEx traders remain well below the net long position of 52% two weeks ago.
The betting could win over top traders
Top traders could have taken their BTC off the stock exchange to find better opportunities for returns. Therefore, assuming that they took short positions solely by monitoring the centralized exchanges could be a bold conclusion.
From today’s perspective, the long-to-short indicator does not show any extreme net long positions from arbitrage desks, market makers and whales. A balanced futures market suggests that there is ample room for buying activity if BTC continues to climb to $ 50,000 and above.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. Every investment and trading step is associated with risks. You should do your own research when making a decision.
