Data shows pro traders increased leveraged long positions even as the Bitcoin price traded in a tight range this week.
Bitcoin (BTC) might have been ranging from $57,000 to $59,500 over the last couple of days, but the top traders at major exchanges have increased their long positions. A similar move also happened in the monthly futures contracts, as the basis rate has increased.
After marking a $61,750 all-time high on March 13, Bitcoin has been trying to find new support levels. Although BTC initially held ground at $54,000, there currently seems to be decent buying activity around $57,000.
While professional traders’ optimism (as measured by their long-to-short exposure and the futures contracts premium) has gone down substantially, their interest seems to be picking up, and this is a bullish indicator.
Top traders increased their long positions
The top traders’ long-to-short indicator is calculated using clients’ consolidated positions, including spot, margin, perpetual and futures contracts. This metric provides a broader view of the professional traders effective net position by gathering data from multiple markets.
Despite the discrepancies between crypto exchange methodologies, analyzing changes over time provides valuable insight.
OKEx top traders correctly played the recent BTC price movement as they bought the dip on March 15, moving to a 1.35 ratio favoring longs, which is the highest level seen in 2 weeks.
Huobi top traders saw a similar performance, but on a smaller scale, they increased their 0.80 ratio to 0.90. Keep in mind that doesn’t necessarily indicate those traders are bearish since a 10% net short position has been their average over the past 30 days.
Lastly, top traders at Binance reduced their longs as BTC crashed on March 15, but they have since kept their 1.21 ratio which favors longs by 21%.
Overall, the average top traders’ long-to-short position went from 1.03 (flat) on Jan. 14 to the current 1.15 figure, which favors net longs. Therefore, it’s clear that arbitrage desks and whales increased their longs throughout the $500 million liquidation that occurred on March 15.
The futures premium increased over the past few days
To assess whether professional traders effectively became optimistic, one should monitor the futures premium (also known as basis). This indicator measures the price gap between futures contract prices and the regular spot market.
The 3-month futures should usually trade with a 6% to 20% annualized premium, as sellers demand a higher price to postpone settlement, thus creating a price difference.
Take notice of how the indicator marked a 20% low on March 17, right before the BTC price pumped from $55,500 to $58,000. Since then, the basis has improved to 25%, signaling professional traders have increased their net longs.
This data corroborates with the exchanges’ long-to-short ratio and displays investors confidence in Bitcoin breaking to a new all-time high in the short-term.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.