It’s been longs paying the price since early December, data shows, in a sign which accompanied a market reversal several times last year.
Tag: Longs
Pro traders cut their EOS longs, but retail FOMO and $50K+ BTC could tip the scale
EOS began a descending trend 53 days ago and despite the recent 27% weekly gain, the altcoin is not showing any signs of a reversal. As a result, investors are questioning whether the former top-5 cryptocurrency has what it takes to turn around after Daniel Larimer, CTO of the development company behind EOS, resigned in late 2020.
The emergence of competing proof of stake smart contract platforms like Solana (SOL), Polkadot (DOT) and Avalanche (AVAX) possibly weighed on this 2017-era project. One potentially bullish catalyst could be the fact that Block.one, the company responsible for the EOS token launch, owns over 160,000 Bitcoin (BTC) according to data compiled by BitcoinTreasuries.net.
EOS might not be the preferred smart contract network of the day, but a handful of working finance, games, exchanges, and decentralized social applications are running. The transaction cost for the user is either negligible or usually covered by the wallet or application, which makes it a great contender for non-fungible tokens (NFT) and social networks.
Having deep pockets is an excellent strategy to land some heavy partnerships and Block.one secured over $300 million from investors, including Peter Thiel, Mike Novogratz and Alan Howard. The EOSIO developer reportedly came up with another $100 million cash injection for Bullish exchange, which completed its seven-week testnet on Sept. 15.
According to its website, all Bullish exchange transactions and states will be validated and stored on EOSIO-based blockchains, enabling instant auditing and upholding integrity. Moreover, the company expects to make $3 billion of assets available to the Bullish liquidity pools.
Retail traders lost confidence after September’s crash
To understand how confident traders are on EOS holding the recent $4.50 support, one should analyze the perpetual contracts futures data. This instrument is the retail traders’ preferred market because its price tends to track the regular spot markets. Unlike quarterly futures, there is no need to manually roll over the contracts nearing expiry.
In any futures contract trade, longs (buyers) and shorts (sellers) are matched at all times, but their leverage varies. Consequently, exchanges will charge a funding rate to whichever side demands more leverage, and this fee is paid to the opposing side.
Neutral markets tend to display a 0% to 0.03% positive funding rate, equivalent to 0.6% per week, indicating that longs are the ones paying it.
Data reveals a complete absence of bullish bets since Sept. 19 when the cryptocurrency market plunged and caused EOS to drop from $5.25 to $4.15 in less than two days. However, the recent rally’s inability to boost leveraged longs can be explained by the EOS price being 25% below the $6.40 peak just 30 days ago.
Top traders sold during the recent rally
To understand how whales and arbitrage desks may have positioned themselves during this period, one should analyze the top traders’ long-to-short ratio.
This indicator is calculated using clients’ consolidated positions, including spot, perpetual and quarterly futures contracts. This metric provides a broader view of the professional traders’ effective net position by gathering data from multiple markets.
As shown above, the 1.90 long-to-short ratio seen on Oct. 3 still favors longs but is the lowest level since the Sept. 19 price crash. Interestingly, the recent 27% weekly gains happened while the top traders were reducing their bullish positions. Meanwhile, the current 3.0 long-to-short indicator sits slightly below the previous 30-day average of 3.50.
Both retail and pro traders seem unconvinced that the Bullish exchange launch will be enough to break the prevailing bearish trend initiated in mid-August. For EOS to regain investor confidence, it seems essential to show that their decentralized applications are gaining traction as the competition gains ground in NFT and DeFi sector.
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.
Bitcoin’s Hashrate Edges Closer to the 30-Day Moving Average, Suggesting a Bullish Crossover
Bitcoin miners seem to be on the right footing as the hashrate is on an upward trajectory after nosediving by more than 50%. 
Crypto analytic firm Dilution-proof explained:
“The Bitcoin hashrate has recovered enough that its 30-day moving average (Green) is close to a bullish crossover of its 60-day moving average (Blue), which precedes a buy signal on the Hash Ribbon indicator (when the dark red area ends).”
The hashrate is used to measure the processing power of the BTC network. It allows computers to process and solve problems that would enable transactions to be approved and confirmed across the network.
Crypto mining continues to be unwelcome on Chinese soil
A drop in BTC’s hashrate was prompted by an intensified crypto mining crackdown by Chinese authorities that started in May.
Therefore, Bitcoin mining continues to be unwelcome on Chinese soil, given that Anhui became the latest province to shut down all crypto mining activities mid last month, citing an acute power shortage.
In June, Chinese authorities disconnected BTC mining sites in Sichuan. As a result, more than 90% of China’s crypto mining capacity was hampered.
Crypto data provider CoinMetrics recently disclosed that China’s sudden crackdown on mining in Q2 2021 left miners with no choice but to shut down operations and move elsewhere. As a result, Bitcoin’s hashrate fell by more than 50%, but it appears to be rebounding.
The upward trajectory in BTC’s hashrate is caused by a shift from the East to the West, while the United States. is emerging as the biggest beneficiary. For instance, the US share of hashrate skyrocketed to 16.8% from just over 4%.
The bearish and neutral ratios between longs and shorts
According to crypto data provider Santiment:
“The ratio between longs vs. shorts continues to fluctuate between bearish and neutral since Bitcoin’s drop in May. The good news about Bitmex’s contract funding rate continuing to be negative, is that there is less downside risk for BTC’s price.”
With Bitcoin’s hashrate recovering, whether this will prompt an upswing in price remains to be seen as downside risk continues to drop.
Image source: Shutterstock
Bears batter Bitcoin market sentiment as Bitfinex margin shorts surge 378%
Bitcoin (BTC) bulls should brace for a potential onslaught from bears as the number of margined short positions on Bitfinex jumps by a little over 378%.
Known to most by the ticker BTCUSD Shorts, the dataset records the number of bearish positions in the Bitcoin market. In simple terms, traders borrow funds from Bitfinex — their broker — to trade bet on bearish outcomes for the instrument BTC/USD. Meanwhile, the value of opened short positions is measured in BTC.
The number of short margined positions on Bitfinex reached an intraday high of 6,468.2202 BTC this Monday, up more than 378% from its previous session’s low at 1,351.72 BTC.
The spike prompted some analysts to alarm about a potential price crash in the Bitcoin spot market, primarily because a similar wild BTCUSD Shorts uptrend at the beginning of last month had led the BTC/USD exchange rate down by almost $13,000 on May 19.
For instance, independent market researcher Fomocap tweeted a chart that showed a visible correlation between Bitcoin spot rates and its margined short positions. The analyst highlighted two instances to note that two metrics moved inversely with some lag.
His first example showed that on May 25, BTCUSD Shorts dropped lower, which was later led to a price rally in Bitcoin spot markets.
The second example showed Bitcoin spot prices crashing after a spike in BTCUSD Shorts.
EBlockChain, a TradingView.com contributor, said earlier Monday that BTCUSD Shorts exceeding 200% and above is a “strong indication” of an imminent dump in Bitcoin spot markets. The analyst added:
“It could be triggered in a [matter] of few hours [to] three days max.”
Long margined positions, meanwhile
The boldly bearish statements for Bitcoin also came as its margin-longed positions rose steadily.
BTCUSD Longs, another Bitfinex dataset that records the number of bullish margin positions, surged to as high as 44,538.6579 BTC on Monday. So it appears, Bitcoin’s long exposure remained higher than short exposure in totality, illustrating that, to traders, the direction of the least risk was to the upside.
But a sudden drop in Bitcoin spot prices could also lead leveraged long holders to dump their BTCUSD positions, which, in turn, incites further selling. Such an event is called “long squeeze.” May 19’s price crash, for example, had liquidated about $7.5 billion of long-leveraged positions across the cryptocurrency derivatives market.
Jacob Canfield, a crypto trader, provided an optimistic outlook for Bitcoin following the May crash. Last week, the analyst stated that Bitcoin has already dropped by more than 40% following its May’s Long Squeeze — and now there is a lesser probability of facing another significant bearish move.
After a long squeeze and liquidity is taken to the downside.
Liquidity is usually engineered to the upside and shorts get trapped thinking more downside is coming.
We already got 40% drop.
Now it’s bears turn to get rekt again.
— Jacob Canfield (@JacobCanfield) June 2, 2021
Meanwhile, the cost to fund long positions in the Bitcoin derivatives market remained largely below zero following the May 19 crash. Negative funding rates cause bearish traders to pay fees every eight hours. The situation encourages market makers and arbitrage desks to buy inverse swaps — or perpetual contracts — as they simultaneously unload their futures monthly contracts.
Analysts typically interpret negative funding rates as a buy indicator. They create
Technicals disappoint
Bitcoin’s ongoing consolidation move has many traders to point out the possible formation of a Bearish Pennant structure.
Not a big fan of this structure. $BTC pic.twitter.com/yO8bG66Zzr
— Blackbeard (@crypto_blkbeard) June 7, 2021
In retrospect, bearish pennants are downside continuation indicators, i.e., their setup typically involves the asset breaking out of the range and continuing in the direction of its previous trend. For example, Bitcoin dropped from around $65,000 to $30,000 before forming the pennant. Therefore, its likelihood of continuing lower appears higher based on technical structures alone.
Meanwhile, one bullish backstop for Bitcoin remains fears of higher inflation. This week, the U.S. Bureau of Labor Statistics will release May’s Consumer Price Index (CPI) report. The data will set the future tone for Federal Reserve’s expansionary monetary policies, including near-zero lending rates and infinite bond-buying programs.
Economists forecast that CPI would rise to 4.7% for May compared to 4.2% in April.
On-Chain metrics bullish
More evidence dropped in about investors’ intention to hold Bitcoin than trade/liquidate them for other assets. For example, on-chain analytics firm Glassnode reported a decline in net exchange flows involving Bitcoin.
Meanwhile, its rival CryptoQuant highlighted a significant drop in volume across the Bitcoin blockchain, hinting at a similar HODLING outlook via its “BTC: Active Address Count” metric.
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.
Bulls vs. Bears: Over $1.1 Billion Shorts and Longs Liquidated in the Past 24 Hours
The past 24 hours on the cryptocurrency market have been particularly intense. This time around, the action doesn’t seem to come from Bitcoin, which has been taking a breather.
Altcoins, on the other hand, are going parabolic. As CryptoPotato reported, they added almost $40 billion to the total market cap. Despite this increase, both long and short liquidations are off the charts.
Over $1.1 Billion Liquidated in a Day
As it’s oftentimes the case, when Bitcoin stops its advance, alternative cryptocurrencies take advantage and start to pop. This is what has been happening over the past couple of days. The primary cryptocurrency declined in value, which allowed room for others to step in.
The total trading volume in the past 24 hours alone surged to just shy of $400 billion. In the same period of time, more than $1.1 billion worth of short and long positions were liquidated. This translates to almost 120,000 traders on the major exchanges.
The largest single liquidation order over the past hour took place on Huobi and had a face value of the whopping $12.92 million. Over the same period of time, about $31 million worth of long and short positions were liquidated.
As seen in the above chart, the majority of positions were long, accounting for a total of $685 million. Leading the way is Binance, which doesn’t really come as a surprise. Next in line are Huobi, Bybit, and OKEx.
A Zero-Sum Game
Trading is a zero-sum game. This means that for one to win, another has to lose. It’s a paramount principle that needs to be kept under close consideration when stepping into a market as volatile as this one.
This is especially true for newcomers. Data from Google Trends reveals that the interest in Bitcoin has increased substantially over the past month.
It’s obvious that the current levels are nowhere near their peak from back in 2017, but the massive volatility can cause serious capital loss unless risk management and proper principles are in place.
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📈💸 As Bitcoin continues its ATH journey, our Bitmex perpetual contract funding rates data shows a large spike in $BTC (16-day high), and even larger one in $ETH (17-month high) today. When funding rates are positive, longs are paying fees to shorts.
📈💸 As #Bitcoin continues its ATH journey, our #Bitmex perpetual contract funding rates data shows a large spike in $BTC (16-day high), and even larger one in $ETH (17-month high) today. When funding rates are positive, longs are paying fees to shorts. https://t.co/89v9nNSUuB https://t.co/4cTMY7XfU3