Crypto Twitter says Bitcoin shorts are increasing, but data shows otherwise

Crypto Twitter says Bitcoin shorts are increasing, but data shows otherwise

“A growing number of analysts have flipped bearish on Bitcoin and expect a significant price drop, but analyzing data from the perpetual futures and options markets uncovers a contrasting narrative.
Margin trading allows investors to borrow stablecoins or cryptocurrency to leverage their position and improve the expected return. For example, borrowing Tether (USDT) will allow one to buy Bitcoin (BTC), thus increasing their Bitcoin long position. Investors can also borrow BTC to margin trade a short position, thus betting on price downside. This is why some analysts monitor the total lending amounts of Bitcoin and Tether to gain insight into whether investors are leaning bullish or bearish.Are analysts flipping bearish based only on Bitfinex’s margin data?This week, some prominent analysts cited a surge in Bitcoin short positions on Bitfinex, peaking at 6,621 BTC on June 7. As Cointelegraph reported, independent researcher Fomocap found a visible correlation between margined short positions and the May 19 price crash.However, when analyzing a broader scope of data — including the margin longs, perpetual contracts funding rate and protective put options — there is no evidence of prominent players preparing for a surprise negative move.A single instance of Bitcoin margin shorts spiking ahead of the negative price swing should not be considered a leading indicator. Furthermore, one needs to factor in Bitcoin margin longs — an opposing, usually larger force.Bitfinex margin Bitcoin/USD longs/shorts ratio. Source: TradingViewAs the above chart indicates, even on May 17 the number of BTC/USD long margin contracts outpaced shorts by 3.6, at 39,000 BTC. In fact, the last time this indicator dropped below 2.0, favoring longs, was on Nov. 26, 2020. The result was not good for the shorts, as Bitcoin rallied 64% over the following 30 days.OKEx USDT/BTC lending ratio. Source: OKExWhenever traders borrow Tether and stablecoins, they are likely long on cryptocurrencies. On the other hand, BTC borrowing is mainly used for short positions.Theoretically, whenever the USDT/BTC lending ratio goes up, the market is angled in a bullish manner. The ratio at OKEx bottomed at 3.5 on May 20, favoring longs, but it quickly returned to the 5.5 level. Therefore, there is no evidence of a significant movement favoring shorts on margin markets.The perpetual futures funding rate is still flatPerpetual futures prices trade very close to regular spot exchanges, making the lives of retail traders a lot easier because they no longer need to calculate the futures premium.This magic can only be achieved by the funding rate charged from longs (buyers) when demanding more leverage. However, when the situation is reversed and shorts (sellers) are over-leveraged, the funding rate goes negative, and they become the ones paying the fee.Bitcoin perpetual futures 8-hour funding rate. Source: BybtAs displayed above, the funding rate has been mostly flat since May 19. Had there been a massive surge for shorting demand, the indicator would have reflected the move.The options put-to-call ratio remains bullishThe call (buy) option provides its buyer with upside price protection, and the put (sell) does the opposite. This means traders aiming for neutral-to-bearish strategies will typically rely on put options. On the other hand, call options are more commonly used for bullish positions.Aggregate Bitcoin put-to-call options ratio. Source: CryptoRankTake notice of how the neutral-to-bullish call options outnumber the protective puts by nearly 90%. Had professional traders and whales been anticipating a market crash, this ratio would have been positively impacted.Investors should not make trading decisions based on a single indicator, as the remaining markets and exchanges may not corroborate it. For now, there is absolutely no indication that heavy players are betting on Bitcoin short positions.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.”

Source: Cointelegraph.com News

Gate.io Invites Community To Create And Vote For OpenPunk NFTs

“Leading digital asset exchange, Gate.io, has announced the next phase of its community-driven OpenPunks NFT programme. The OpenPunks collection was launched two weeks ago as the world’s first community-driven NFT collection. The first batch of ‘genesis’ OpenPunks were minted and users were invited to submit their own designs based on

Yield Farming Is The Death Of Savings Accounts

“Image by FelixMittermeier from Pixabay  Digital currencies have long been lauded as a revolutionary aspect of finance in the future. However, it wasn’t until 2020, when there was a scramble to hedge against rising inflation and disruption of the finance world by a worldwide lockdown, that cryptocurrencies caught on.  Over

Solana must do the following for another 20% jump in 24 hours

“Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice After overcoming some hurdles over the past week, Solana was back among the gainers. A 13% surge over the last 24 hours was timely after SOL negotiated past certain

Central Bank of Ukraine Supports Crypto Industry, Fears Cryptocurrency

“The National Bank of Ukraine recognizes the benefits of endorsing crypto innovations but also fears cryptocurrencies could gain ground on the national fiat. Announcing its monetary policy guidelines for the near future, the regulator noted it’s going to defend the status of the hryvnia as the only legal tender in