What Does Margin Rate Drop Mean for Bitcoin Price?

Bitcoin prices surged more than 10% between April 9 and April 14, marking their highest daily close in more than 10 months. The S&P 500 and gold are both near their highest levels in six months, although some analysts see the move as representing some degree of decoupling from traditional markets.

price eliminateAlthough itcoin breaks through $30,000 negative macro news

Bitcoin rallied above $30,000 as the U.S. Dollar Strength Index (DYX — a measure of the U.S. dollar against foreign currencies) hit a 12-month low.

The gauge fell to 100.8 on April 14 from 104.7 a month earlier, as investors saw a high chance of more liquidity injections from the Federal Reserve.

The minutes of the latest monetary policy meeting released by the Federal Reserve on April 12 clearly mentioned that due to the banking crisis, a “moderate recession” is expected by the end of 2023. Even if inflation is no longer the top priority, monetary authorities have little chance of raising interest rates further without exacerbating the economic crisis.

Strong macroeconomic data explains investor optimism

While the global economy is likely to deteriorate in the coming months, recent macroeconomic data has been mostly positive. For example, Eurostat reported that industrial output in the 20-member country rose 1.5% compared with February, while economists polled by Reuters expected a 1% contraction.

In addition, China’s latest macroeconomic data showed encouraging trends, with exports rising 14.8% year-on-year in March, reversing a five-month decline, and economists’ forecast of a 7% decline was also uncertain. As a result, China posted a trade surplus of US$89.2bn in March, well above most market expectations of US$39.2bn.

The contrast between the current economic dynamics and the impending recession as higher funding costs and reduced risk appetite among lenders leads Bitcoin investors to question the sustainability of this level of support. $30,000 grant.

Let’s take a look at Bitcoin derivatives indicators to get a better idea of ​​where professional traders stand in the current market environment.

Derivatives bitcoin show no have Order leverage is too large long

The margin market provides insight into how professional traders are positioned as it allows investors to borrow cryptocurrencies to leverage their positions.

For example, OKX offers a margin lending metric based on the stablecoin/BTC ratio. Traders can increase their exposure by borrowing stablecoins to buy Bitcoin. Bitcoin borrowers, on the other hand, can only bet on the downside.


OKX Stablecoin/BTC Margin Lending Rate | Source: OKX

The graph above shows how the margin lending rate for OKX traders fell between April 9 and April 11. This is very sane, as no leverage is used to support Bitcoin’s price increase, at least not without the use of margin markets. Moreover, with traders generally optimistic, the current margin of 15 is relatively neutral.

The long-short indicator does not include external factors that only affect the margin market. In addition, the index collects data from the positions of spot, perpetual and quarterly futures clients, providing better information on how professional traders are positioned.

There are sometimes methodological differences between exchanges, so readers should focus on changes rather than absolute numbers.


Bitcoin Long/Short Ratio by Top Traders on Exchanges | Source: Coinglass

Interestingly, professional traders are maintaining their leveraged long positions even as Bitcoin crosses the $30,000 mark for the first time in 10 months, according to long-short metrics.

For example, from April 9 to April 14, the ratio for Huobi traders has remained stable at close to 0.98. Meanwhile, on the Binance exchange, rates have moved up slightly in Long’s favor, from 1.12 on April 9 to the current 1.14. Finally, on the OKX exchange, the exchange rate fell slightly from 1 on April 9 to the current 0.91.

Additionally, Bitcoin futures traders are not confident enough to add leveraged bullish positions. So even if Bitcoin derivatives retests $29,000, bulls need not worry as there is little demand from short sellers and buyers are not over-leveraged.

In other words, the market structure for Bitcoin is bullish and Bitcoin could easily rise another 10% to $33,000 as sellers are now shorting.

Ming Ying

As reported by Cointelegraph

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