Bitcoin traders anticipate new yearly lows after BTC’s $25K rejection — Data disagrees


Bitcoin (BTC) showed weakness on August 15, posting a 5% loss after testing the $25,000 resistance. The move led to the liquidation of long leveraged positions in excess of $150 million and led some traders to predict a return towards the annual low in the $18,000 range.

The price action coincided with deteriorating conditions for technology stocks, including Chinese giant Tencent, which are expected to post their first-ever quarterly decline. According to analysts, the Chinese gaming and social media company is expected to report a quarterly profit of about $19.5 billion, 4% lower than the previous year.

Moreover, on August 16, investment bank Citi lowered Zoom Video Communications (ZM)’s recommendation to sell, adding that the stock is “high risk.” Analysts explained that the challenging post-COVID dynamic, as well as additional competition from Microsoft Teams, likely caused a 20% drop in ZM shares.

The overall downtrend continues to plague crypto investors, a move described by influencer and trader ChrisBTCbull, who stated that a simple rejection at $25,000 caused traders to post targets below $17,000.

Margin traders still bullish despite $25,000 rejection
Monitoring the margin and options markets provides excellent insights into how professional traders position themselves. For example, a negative reading could occur if whales and market makers reduce their exposure as Bitcoin approached the $25,000 resistance.

Margin trading allows investors to borrow cryptocurrencies to leverage their trading position, and increase returns. For example, an individual can increase exposure by borrowing stablecoins to purchase an additional bitcoin position.

On the other hand, bitcoin borrowers can only short the cryptocurrency because they are betting that its price will fall. Unlike futures contracts, the balance between long and margin positions is not always the same.

OKX USDT/BTC Margin Lending Ratio. Source: OKX
The above chart shows that the margin lending ratio for OKX traders has remained relatively stable around 14 while the Bitcoin price jumped 6.3% in just two days to be rejected after hitting the $25,200 resistance.

Moreover, the scale remains bullish with a wide margin preference for borrowing the stablecoin. As a result, professional traders kept their bullish positions, and no additional bearish margin trades emerged as Bitcoin reclaimed 5.5% on August 16.

Related: Bitcoin miners consume 27% less BTC after 3 months of big sale

Options markets take a neutral stance
There is uncertainty as to whether Bitcoin will rally back towards the $25,000 resistance, but the 25% delta skew is a milestone when arbitrage desks and market makers increase the cost of protecting against an upside or downside trend.

The indicator compares similar call (buy) and put (sell) options and will turn positive when fear spreads because the premium for call options is higher than for risk call options.

The skew indicator will move above 10% if traders fear the collapse of the bitcoin price. On the other hand, generalized excitation reflects a negative deviation of 10%.

30-Day Bitcoin Options Shows 25% Delta Deviation: Source:
As shown above, delta skew has barely moved 25% since August 11, swinging between 5% and 7% most of the time. This range is considered neutral because options traders are pricing similar risks to unexpected pumps or dumps.

If professional traders had entered the ‘fear’ sentiment, this metric would have moved above 10%, reflecting a lack of interest in offering protection from the downside.

Despite the neutral Bitcoin options index, OKX margin lending rate showed that whales and market makers maintained their bullish bets after BTC price plunged 5.5% on August 16. For this reason, investors should expect another retest of the $25,000 resistance once global macroeconomic conditions improve.

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 movement involves risks. You should do your research when making a decision.



Please enter your comment!
Please enter your name here