Bitcoin (BTC) has struggled to maintain support levels of $ 55,000 for the past 16 days or since the record liquidation of $ 5 billion contracts on April 17. The rejection, which came after the all-time high of $ 64,900, had a devastating effect on retail sentiment, as measured by the sharp decline in the perpetual futures funding rate.
Despite Bitcoin's recent underperformance and today's 6.5% decline, pro traders bought the dip in the past 24 hours. These whale and arbitrage desk movements are reflected in the long-to-short ratio of OKEx futures as well as Bitfinex's margin credit markets. Since this purchase is taking place, retailers are mostly calm, which is reflected in the neutral perpetual funding rate.
USDT marginalized perpetual futures 8-hour financing rate. Source: Bybt
As shown above, the 8-hour refinancing rate for perpetual futures (inverse swaps) has been below 0.05% in the past few weeks. Month-end contracts are priced significantly different from regular cash exchanges, reflecting the imbalance between long and short leverage.
This discrepancy is why retailers tend to prefer perpetual futures, albeit with the different carry costs caused by changes in the funding rate.
The current 8 hour charge is a 1% weekly charge, indicating a slight imbalance in longs. However, this level is well below the values of 0.10% and higher recorded at the beginning of April. This data is clear evidence that despite the 9% correction in two days, retailers are reluctant to add long Bitcoin positions.
On the flip side, the top trader's long-to-short indicator hit its highest level in 30 days, signaling buying activity from whales and arbitrage desks. This indicator is calculated by analyzing the local client's consolidated position, perpetual contracts and futures contracts. As a result, you will get a clearer view of whether professional traders are bullish or bearish.
OKEx Top Trader Long-Short Ratio. Source: Bybt
As shown above, the current long-to-short ratio of OKEx futures is currently favoring longs by 94%. This buying activity began in the early hours of May 4th when Bitcoin fell below $ 55,000. More importantly, it signals even more confidence than it did on April 14, when BTC rose to its all-time high of $ 64,900.
However, to confirm whether this movement is widespread, one should also evaluate the margin markets. For example, the leading exchange (Bitfinex) holds leveraged Bitcoin positions worth over $ 1.8 billion.
BTC price (orange, left) vs. Bitfinex long-short margin ratio (blue, right). Source: TradingView
Bitfinex is showing spectacular growth in the BTC margin markets with longs over 50 times the amount borrowed from shorts. These levels are unprecedented in the history of the exchange and confirm the data of the OKEx futures markets.
There is no doubt that despite today's Bitcoin slump, professional traders are ultra-bullish. As for the lack of appetite among retailers, their focus right now seems to be on altcoins.
Currently, 18 of the top 50 altcoins have gained 45% or more in the last 30 days.
The question is, can the altcoin rally continue if BTC doesn't hit a new all-time high in the next few weeks?
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. Every investment and trading step is associated with risks. You should do your own research when making a decision.