As Bitcoin magazine As Cointelegraph reported, Bitcoin investors seem concerned that China’s second largest real estate developer, Evergrande Group, will be behind with $ 300 billion. These concerns became apparent in global equity markets, which fell between 1.5% and 3%.
Despite the price volatility, the net outflow of Bitcoin from the exchanges has continued to trend for months, especially on Coinbase Pro.
Traders also know that each exchange has a different user profile. For example, the amount of Bitcoin being liquidated on Bybit is much higher compared to the FTX exchange, which is known to have more conservative customers.
Take, for example, when Bitcoin fell below $ 43,000, which caused the liquidation of a $ 1 billion long contract led by Bybit, even though it had $ 2.34 billion in open interest (OI) for Had futures contracts.
Bitcoin futures liquidated on exchanges | Source: Bybt.com
The data above shows that Bybit traders take higher risk and often use higher leverage. Meanwhile, Binance and FTX investors were less affected by Bitcoin’s 11% decline in the past 24 hours.
Bitcoin price chart | Source: Tradingview
Professional traders remain neutral on the uptrend
To understand whether professional traders are following an up or down trend, one should analyze the futures premium (base rate). This indicator measures the difference between a longer-term futures contract and the ranges in the current spot market.
In healthy markets, the annual premiums are between 5 and 15%, a situation known as contango. This difference in price is due to the seller asking more money to delay payment.
When this indicator fades or turns negative, a red alert called backwardation will appear.
Based on 3-month Bitcoin futures contract | Source: Laevitas.ch
As described above, the current annual premium of 7% is neutral, but corresponds to the average of the previous month. When professional traders get nervous or bearish, this indicator drops below 5%.
Long-to-short ratios of the top traders show buying actions
Investors should monitor the long-to-short ratios of professional traders on major exchanges to accurately measure their positions. This metric provides a complete view of traders’ effective net positions by gathering data from a variety of futures and margin markets.
Long-to-short ratios of the top traders at OKEx and Binance | Source: Bybt.com
It’s worth noting that exchanges collect data on top traders differently as there are several ways to measure clients’ net exposure. Therefore, any comparison between different providers should be based on the percentage change rather than the absolute number.
The long-to-short ratio of top traders at OKEx has increased from 8% in favor of longs to 54% today, the highest level in the last ten days. On the flip side, traders in Binance’s derivatives market kept a constant 10% rate in favor of long positions despite the correction in the Bitcoin price.
Both data confirm that retailers are likely to be more affected by rising leveraged positions. In the meantime, professional traders either hold positions or take advantage of the drop in prices to add longs.
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According to Cointelegraph