Bitcoin (BTC) has struggled to maintain support levels of $ 55,000 for the past 16 days, or basically since the record liquidation of $ 5 billion contracts on April 17. The rejection after the all-time high of $ 64,900 had a devastating effect on retail sentiment, as measured by the sharp decline in the perpetual futures funding rate.
Despite Bitcoin’s recent underperformance and 4.5% decline on May 4th, pro traders bought the dip in the past 24 hours. These whale and arbitrage desk movements are reflected in the long-to-short ratio of OKEx futures as well as Bitfinex’s margin credit markets. Since this purchase is taking place, retailers are mostly calm, which is reflected in the neutral perpetual funding rate.
As shown above, the 8-hour refinancing rate for perpetual futures (inverse swaps) has been below 0.05% in the last few weeks. Month-end contracts are priced significantly different from regular cash exchanges, reflecting the imbalance between long and short leverage.
This discrepancy is why retailers tend to prefer perpetual futures, albeit with the different carry costs caused by changes in the funding rate.
The current eight hour charge equates to a 1% weekly charge, indicating a slight imbalance in longs. However, this level is well below the values of 0.10% and higher recorded at the beginning of April. This data is clear evidence that despite the 9% correction in two days, retailers are reluctant to add long Bitcoin positions.
On the flip side, the top trader’s long-to-short indicator hit its highest level in 30 days, signaling buying activity from whales and arbitrage desks. This indicator is calculated by analyzing the local client’s consolidated position, perpetual contracts and futures contracts. As a result, you will get a clearer view of whether professional traders are bullish or bearish.
As shown above, the current long-to-short ratio of OKEx futures is currently favoring longs by 94%. This buying activity began in the early hours of May 4th when Bitcoin fell below $ 55,000. More importantly, it signals even more confidence than it did on April 14, when BTC rose to its all-time high of $ 64,900.
However, to confirm whether this move is widespread, one should also evaluate the margin markets. For example, the leading exchange (Bitfinex) holds leveraged Bitcoin positions worth over $ 1.8 billion.
Bitfinex is showing spectacular growth in the BTC margin markets with long positions over 50 times the amount borrowed from shorts. These levels are unprecedented in the history of the exchange and confirm the data from OKEx futures markets.
There is no doubt that despite the May 4th bitcoin slump, professional traders are extremely bullish. As for retailers’ lack of appetite, it seems their focus right now is on altcoins.
Currently, 18 of the top 50 altcoins have gained 45% or more in the last 30 days.
The question is whether the altcoin rally can continue unless BTC hits a new all-time high in the next few weeks.
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