Today, the price of bitcoin (BTC) rose to a new full-time high of $ 44,900 shortly after Tesla announced a $ 1.5 billion investment. The event resulted in $ 555 million shorts closing in two hours, and this happened when open interest in Bitcoin futures reached $ 13.7 billion dollars, only 3% below history.
These price movements have increased the cost of having long positions dramatically, mainly for those who use eternal future. This indicator raised a yellow flag that showed how exploited these investors are and their potential impact on the price.
As shown above, the total open interest in BTC futures reached a full-time high of $ 15 billion.
When unexpected positive news hits the market, it is natural for players to take positions with extreme influence. This happens both with sellers in short positions, whose margins fall due to losses, and with buyers in long positions, who seek to increase their positions.
Insufficient short positions are wound up as the positions are forced to close and the leverage is reduced. On the other hand, long positions are profitable, so increasing your position does not increase their influence as much.
After the first injection, the financing rate is expected to rise, and the fees paid by long traders to support their eternal future (reverse swaps) will increase.
As shown above, the 8-hour fee charged to compensate for a possible delivery imbalance between long and short positions has just reached 0.25%. This rate corresponds to 5.4% per week, which is quite a lot for the owners.
It should be noted that although Bitcoin continues to rise in price, seen on January 29, the financing rate tends to adjust. Two main reasons contributed to this: Debt buyers invested more and arbitrage tables that sold perpetual futures while buying spot BTC at the same time.
Financing rates from 0.05% to 0.10% over 8 hours are standard and are expected during a beef market. This indicator will translate into monthly commissions from 4.6% to 9.4% and will not be problematic for long positions.
To understand how whales and arbitrage services may have positioned themselves during this period, it is useful to look more closely at the long / short relationship between leading traders on major stock exchanges.
OKEx Traders bought leading prices
The best traders at Binance had a net length of 33%, and favored longings ahead of the February 8 rally, slightly above the 2-week average of 26%. As soon as the news of Tesla hit the press, they increased their long positions and raised the indicator to 46%, which is the highest level in almost a month.
On the other hand, the news did not affect the leading traders in Huobi. Their net position was 0.74, which means that 26% preferred short positions before 8 February. Their current net card position of 28% is still in line with the previous averages of two weeks.
Finally, the top traders OKEx increased their net long positions from 6 February to the early hours of 8 February and reached a 14% net length. After somehow correctly predicting the rally, these traders aggressively cut the net long positions when BTC reached its full time.
The short-term high financing rate may be a disadvantage for long positions, but there are currently no signs of excessive influence on the part of buyers. At least for the big marketers and arbitrage tables that make up the best traders on most exchanges.