Bitcoin (BTC) investors seem concerned about the increasing speculation that China’s second-largest property developer, Evergrande Group, will default on its $300 billion in debts. These fears manifest in global equities markets which saw a 1.5% to 3% drop at this morning’s market open.
Despite the price move, the BTC outflow (net withdrawals) from exchanges has continued a multi-month trend, particularly on Coinbase Pro.
Traders also know that every exchange has a different user profile. For example, liquidations on Bybit tend to be more extreme when compared to FTX, which is known for having more conservative clients.
Take, for example, today’s drop below $43,000, which caused a $1 billion long contracts liquidation led by Bybit even though there was $2.34 billion in futures open interest. This number is lower than Binance’s $3.66 billion and FTX’s $2.51 billion liquidations.
The data above shows that Bybit traders are more risk-takers, typically using higher leverage. Meanwhile, Binance and FTX derivatives investors were proportionately less impacted by the 11% daily negative move.
Pro traders remain neutral-to-bullish
To understand how bullish or bearish professional traders are leaning, one should analyze the futures premium (or basis rate). This indicator measures the difference between longer-term futures contracts and the current spot market levels.
In healthy markets, a 5% to 15% annualized premium is expected, which is a situation known as contango. This price gap is caused by sellers demanding more money to withhold settlement longer.
A red alert would emerge whenever this indicator fades or turns negative, known as “backwardation.”
As depicted above, the current 7% annualized premium is neutral but in line with the previous month’s average. Had pro traders become worried or bearish, this indicator would have flipped below 5%.
Top traders long-to-short ratio shows buying activity
Investors should monitor the top traders’ long-to-short ratio at leading crypto exchanges to precisely measure how professional traders are positioned. This metric provides a complete view of the traders’ effective net position by gathering data from multiple futures and margin markets.
It is worth highlighting that each exchange gathers data on top traders differently because there are multiple ways to measure a clients’ net exposure. Therefore, any comparison between multiple providers should be made on percentage changes instead of absolute numbers.
OKEx top traders long-to-short ratio hiked from an 8% position favoring longs to the current 54%, the highest level in ten days. Binance derivatives traders, on the other hand, held a consistently 10% ratio favoring longs despite the Bitcoin price correction.
Both data confirm that retail traders were likely the ones more impacted due to high-leverage bullish positions. Meanwhile, pro traders either kept their positions or took advantage of the discounted price to add long positions.