The price of Bitcoin (BTC) rose this week to a new three-year high of $ 18,965, which led investors to believe it was a new full-time high above $ 20,000.

Although these are turbulent times, the data show that some professional investors are concerned about prices at these levels, and the lack of FOMO for traders could trigger a sharp pullback.

The data show that bitcoin has not experienced a fall of more than 5% since September 4, and the digital asset has risen 84% in the last 77 days, and the last time such a price movement was observed on November 25, 2019.

At that time, BTC had moved 47% from $ 6,900 to $ 10,150 by mid-February 2020, which is 86 days. However, one should not jump to the conclusion that a fundamental correction necessarily follows every move without a daily drop of 5%.

Evidence of these divergent expectations can be gleaned from the future. Typically, the index should offer an annual premium of 3% to 10%.

Note how traders were willing to pay an additional 20% per year to open leveraged positions in February. This is somewhat unusual and indicates strong optimism.

This time, the benchmark index added about 10%. Thus, we can safely conclude that the probability of settling successive sales orders this time is much lower.

Lack of optimism is a sign of low confidence
Traders were surprised by this unusual trend, and the data confirm a complete lack of conviction. Although the BTC futures premium is currently in bullish territory, it shows that they are being bought arbitrarily.

To effectively assess whether the pros were long during this rally, investors need to track top traders from buying to short-term trading on the leading cryptocurrency exchanges.

At Huobi, we see large traders entering a net selling position when Bitcoin reached the $ 16,000 mark on November 16. On November 19, some bearish prices emerged when BTC failed to overcome the $ 18,000 resistance. Once again, they quickly closed their losses and are now stable. Thus, it can be assumed that professional traders tried to guess the local top without much confidence.

Interestingly, Binance data shows that regular traders adopt a different strategy. Despite this, he still reflected uncertainty, as can be concluded below.

Relationships between lengths and short positions among large Binance BTC traders. Source: Binance
Binance’s top traders had a net length of 10% while Bitcoin accumulated over $ 16,000, but hurried to buy when the price exceeded $ 17,500.

By maintaining a bullish position, they pushed it down significantly as BTC struggled to overcome $ 18,000 on November 18th.

It should be noted that stock exchanges collect data on large traders in different ways, as there are several methods for measuring net customer exposure. Therefore, any comparison between different service providers should be based on percentage changes, not absolute numbers.

Finally, the data point to some hesitation, or at least a lack of firm conviction among top traders.

When the market sends mixed signals, there is nothing wrong with sitting still and not being in position. At least that’s what smart traders do.

Source: CoinTelegraph

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