Data shows that derivatives have nothing to do with Bitcoin’s fall to $29,000


After a brief rebound to $41,000 on June 14, Bitcoin (Bitcoin) Investors may think that the bear market is finally over.After all, this is the highest level since May 21 and the release date of MicroStrategy (MSTR) Announced the successful issuance of USD 500 million bonds.

These funds will usually arrive within one or two business days, and the proceeds will be used to purchase more bitcoins for the business intelligence company’s balance sheet. After this financing, MicroStrategy Sell ​​up to $1 billion in stocks to buy more bitcoins.

However, the following week fell by 30%, causing Bitcoin to fall to its lowest level since January 22. The bottom of $28,800 may last less than 15 minutes, but bear market sentiment has been established.

The sell-off was mainly due to Chinese miners were forced to surrender after abrupt closure Their operations. In addition, on June 21, The People’s Bank of China (PBoC) officially reiterated that all banks And payment institutions “must not be [virtual currency]–Related activities. “

The open question is whether derivatives played an important role in the correction, or at least showed stress signals that might indicate that the second leg is more dangerous?

No sign of discount on futures premium

The futures premium (or basis) measures the gap between the long-term futures contract and the current spot (regular market) level. Whenever the indicator disappears or becomes negative, this is a worrying red flag. This situation is also known as an inverse spread and indicates bearish sentiment.

Huobi 3-month Bitcoin futures basis.Source: Skew

In a healthy market, futures should be traded at an annualized premium of 5% to 15%, also known as futures premium. At the worst moment on June 22, the basis bottomed at 2.5%, which is considered bearish, but not enough to trigger any red flags.

Top traders have zero panic

The long and short indicators of top traders are calculated using the customer’s comprehensive positions, including spot, margin, perpetual contracts and futures contracts. This indicator gathers a broader view of the effective net position of professional traders.

The long-short ratio of top traders on derivatives exchanges. Source: Bybt

Although there are differences between encryption exchange methods, analyzing changes over time provides valuable insights. For example, Binance’s top traders increased their long positions relative to short positions on June 22.

In Huobi, their net short position has increased, but there is nothing unusual, because the indicator has reached the same level two days ago.

Finally, OKEx’s top traders reduced their long positions on June 20, and have maintained a level of 0.80 since then, which is favorable for short positions by 20%.

Long futures liquidation is less than US$600 million

Those who are unaware of price fluctuations will never guess that Bitcoin is trading at a price lower than $29,000 based on futures clearing data.

Total futures liquidation (red long). source. Coinalyze.net

The long position liquidated on June 22 was less than US$600 million, down from US$750 million the day before. If the bulls are over-leveraged, a 20% drop in less than two days will trigger a larger stop loss order.

The data shows that there is currently no sign of bullish pressure, and there is no potential negative volatility caused by the derivatives market.

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