Academy Trading Ideas Article

Bitcoin Pre-Halving Buyers Remain Strong as Shorts Get Liquidated: Crypto Market Daily

2020.05.08

As of press time (13:00 UTC), Bitcoin (BTC) is trading at $9,943.06 and is 7.04 percent over the last 24 hours, per OKEx’s BTC Index Price

Large-cap cryptocurrencies are performing weaker than Bitcoin. Ethereum (ETH) and Bitcoin Cash (BCH) gained 3.71 percent and 4.05 percent, respectively. 

crypto market
OKEx Token Index Board (as of 11:30 UTC). Source: OKEx

High-volume active buying on the spot market pushed the Bitcoin price towards $10,000 on Thursday. The cryptocurrency market leader hit a 24-hour high of $10,074.84 — marking the first time it went above $10,000 since Feb. 24. 

Moreover, the Margin Lending Ratio on OKEx rose significantly during the last 48 hours. It jumped from 1.86 to 3.6 — indicating that many traders were borrowing USDT to buy Bitcoin. 

Shorts are getting liquidated 

We also observed that BTC Top Trader Average Margin Used, an OKEx trading data indicator calculated from the average percentage of initial margin used by the top traders, rose rapidly as the price of Bitcoin rallied. 

The short position margin used was up from 30 percent to 45.92 percent in less than one hour, indicating short-selling traders were facing margin calls. 

This ratio is down to 23 percent, as of press time. 

btc top trader average margin used
BTC Top Trader Average Margin Used. Source: OKEx Trading Data

Hodlers continue accumulating bitcoins

According to cryptocurrency data website glassnode, Hodler Net Position Change — a ratio showing the monthly position change of long term investors — has been in positive territory for the past eight weeks. This indicates that market participants are confident about Bitcoin’s price recovery and long-term outlook. 

In contrast, Hodler Net Position Change was negative in February when the BTC price moved above $10,000. 

Currently, we can see that hodlers are still accumulating bitcoins in large volumes, even at the $9,000 level. 

bitcoin hodler net position change
Bitcoin: Hodler Net Position Change. Source: glassnode

Institutional investors are gaining BTC exposure

The above accumulation coincides with the news that funds from the world of traditional finance are entering the cryptocurrency market. Bloomberg reported that famous macro investor Paul Tudor Jones is buying Bitcoin as a hedge against inflation. The report says he told clients it reminds him of the role gold played in the 1970s. 

Moreover, CME Bitcoin futures open interest (OI) increased by 45 percent this week, in dollar terms. OI has increased to $489 million, per data provider skew. The previous record was set in mid-2019 at around $392 million. This is another evidence that institutional investors are getting more involved. 

cme bitcoin futures total open interest and volumes
CME Bitcoin Futures – Total Open Interest & Volumes ($). Source: skew

Bitcoin Technical Analysis

OKEx BTC Quarterly Futures (BTCUSD20200626) has technically entered the $10,000 to $10,500 area of strong resistance. The bullish momentum is still in control, however. We may see another test in the $10,300 area — but tests without good volume may trigger a pullback. 

An intra-day support level has been up to $9,740 and short-to-mid-term support is still sitting near $8,550. The intraday resistance area to focus on is around $10,300. 

btc usd okex
OKEx BTC Quarterly Futures (BTCUSD0626) 1H chart. Source: OKEx


Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.


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