In the last 24-hours Bitcoin (BTC) price dropped 14% and tested the $32,000 support for the fifth time this year. Traders probably became even more worried as the price fell to $31,050 but at the time of writing the 4-hour chart suggests that the selling could be slowing down.
Currently the shorter-term charts indicate that Bitcoin is still flirting with bearish territory but a number of derivatives indicators and the top traders flow reflect neutral to bullish levels.
The last three times Bitcoin price fell below $32,000, an extensive rally of up to 30% followed. Data shows that the top traders at OKEx have been heavily buying the dip and the futures premium has held in an optimistic range.
BTC/USD 4-hour chart. Source: TradingView
Even though traders are buying this current dip, the sharp $4,200 drop did inflict serious damage on some investors. The move down to $31,270 was followed by $460 million in liquidations at derivatives exchanges. Interestingly, this occurred just as the open interest on BTC futures reached a $13.1 billion all-time high.
Derivatives exchanges BTC futures open interest in USD. Source: Bybt.com
Today's price action might seem worrisome, but it pales in comparison to the Jan.10 24% crash that wiped out $1.5 billion in long contracts.
Veteran traders are more accustomed to Bitcoin's 120% annualized volatility so a 12% price swing isnt particularly frightening. In fact, top traders and arbitrage deks remained relatively calm during the dip.
To understand whether or not Bitcoin is flashing bearish signals, traders can analyze top traders' long-to-short ratio at crypto exchages, the futures premium, and the options skew.
OKEx longs are 2.5 times larger than shorts
Exchange-provided data highlights traders' long-to-short net positioning. By analyzing every client's position on the spot, perpetual and futures contracts, one can obtain a clearer view of whether professional traders are leaning bullish or bearish.
With this said, there are occasional discrepancies in the methodologies between different exchang ...
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