After recovering from its recent short-term low, Bitcoin (BTC) price rose 15% from $ 32,400 to $ 37,200 in three days.
This was an impressive move as BTC price had been trading sideways for weeks and regardless of the reason for the surge, large traders and arbitrage desks would follow the trend.
Interestingly, this is not the case as many of the top traders opened short positions when BTC started its 15% move. Even if a trader has no confidence in a possible retest of the all-time high of $ 42,000, opening shorts while Ether (ETH) surpasses $ 1,600 seems risky.
Note that both of the leading cryptocurrencies trade in tandem most of the time, though investors could switch from BTC to Ether due to their role in decentralized funding, the explosive price hike, and the attraction of the Eth2 stake.
Data from TheTie, an alternative social analytics company, also revealed that Google searches for “buy crypto” had recently hit an all-time high. According to the same source, social media activity in cryptocurrency has increased 135% in the past three months.
In addition to this bullish scenario, global payments giant Visa announced that it is aggressively pursuing cryptocurrency partnerships, including debit cards and digital banks.
Finally, a recent outflow of 15,200 BTC ($ 515 million) on Coinbase was classified as a “bullish signal” by analysts at CryptoQuant. According to CryptoQuant, the outflow suggests an “OTC deal from institutional investors,” potentially piling BTC in cold wallets.
These bullish signals are in contrast to the long-to-short net positioning of exchange traders. This indicator is calculated by analyzing the local client’s consolidated position, perpetual contracts and futures contracts. It offers a clearer view of whether professional traders are bullish or bearish.
With this in mind, there are occasional discrepancies in methodology between different exchanges so viewers should monitor changes rather than absolute numbers.
For the past three days, top traders have increased their shorts on every exchange analyzed. Although large traders, market makers, and arbitrage desks may have positions in their Cold Wallets or Grayscale GBTC funds, the long-to-short ratio shows that there is a lack of confidence as to whether BTC will push through $ 38,000 and hit the $ 40,000 level will be short term.
Additionally, Ether’s recent outperformance may have been fueled by top traders who have reduced BTC exposure. This makes all the more sense when you consider that the upcoming listing of CME ETH will take place on February 8th. It is only natural that institutional investors would see an appetite surge.
Top traders could have taken their BTC off the stock market to find better opportunities for returns. Therefore, to assume that they are all short is a premature conclusion.
If these top traders took BTC short positions, there would be signs in the derivatives markets. To refute that theory, Friday’s $ 1 billion option expiration is still favoring bulls, who currently have many incentives to push the price above $ 40,000.
The views and opinions expressed here are solely those of author 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.