Traders Buy Bitcoin Trough As Evergrande Implosion Shakes Stock Markets

Bitcoin (BTC) investors appear concerned with growing speculation that China’s second-largest real estate developer, Evergrande Group, will default on its $ 300 billion in debt. These fears are manifesting in the global equity markets which recorded a drop of 1.5% to 3% when the markets opened this morning.

Despite the price movement, BTC outflows (net withdrawals) from exchanges continued a trend over several months, especially on Coinbase Pro.

Traders also know that each exchange has a different user profile. For example, liquidations on Bybit tend to be more extreme compared to FTX, which is known to have more conservative clients.

Take, for example, today’s drop below $ 43,000, which caused a $ 1 billion long contract liquidation led by Bybit even though there was $ 2.34 billion in interest. open term. That number is lower than Binance’s $ 3.66 billion and FTX’s $ 2.51 billion liquidations.

The data above shows that Bybit traders take more risk, typically using higher leverage. Meanwhile, Binance and FTX derivatives investors were proportionately less affected by the daily negative movement of 11%.

Professional traders remain neutral to bullish

To understand how bullish or bearish professional traders look, one needs to analyze the term premium (or base rate). This indicator measures the difference between long-term futures contracts and current spot market levels.

In healthy markets, an annualized premium of 5-15% is expected, which is a situation known as contango. This price difference is due to the fact that sellers are asking for more money to withhold payment for longer.

A red alert would appear whenever this indicator fades or turns negative, known as a “pullback.” “

As illustrated above, the current annualized premium of 7% is neutral but in line with the previous month’s average. If professional traders had become worried or bearish, this indicator would have fallen below 5%.

The long / short ratio of top traders shows buying activity

Investors should monitor the long / short ratio of top traders on major crypto exchanges to accurately measure the positioning of professional traders. This metric provides a comprehensive view of the effective net position of traders by bringing together data from multiple futures and margin markets.

It should be noted that each exchange collects data on top traders differently, as there are several ways to measure a client’s net exposure. Therefore, any comparison between multiple vendors should be made on percentage changes rather than absolute numbers.

The long / short ratio of OKEx’s top traders has gone from an 8% position favoring long to 54% currently, the highest level in ten days. Binance derivatives traders, on the other hand, held a constant 10% ratio favoring long positions despite the Bitcoin price correction.

Both data confirm that retail traders were probably the hardest hit due to high leverage bull positions. Meanwhile, professional traders either kept their positions or took advantage of the reduced price to add long positions.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.