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Bitcoin Derivatives OKEx Insights Futures Friday

BTC futures data shows lackluster market sentiment as alts outperform market leader

2021.04.09 Robbie Liu

Bitcoin is unable to get back above the $60,000 mark, but the market remains optimistic about mid-term price — Futures Friday

Futures Friday image

Bitcoin has continued to oscillate over the past week, not showing any decisive bullish moves even though the total cryptocurrency market cap is back around $2 trillion. Since altcoins have outperformed it in recent days, Bitcoin's dominance keeps declining. On the price side, the market leader fell back from 60,000 USDT levels to as low as 55,500 USDT on Wednesday, before recovering to 58,000 USDT levels, as per the OKEx BTC spot price

In last week's Futures Friday, we noted how the overheated retail sentiment also suggests that short-term risk levels are rising. This week, according to OKEx futures data, retail sentiment for trading Bitcoin is lackluster, which could be a reaction to the altcoin season. The long/short ratio did not recover with the price rebound on Wednesday, but the quarterly contract premium remains above 7%. This reveals short-term caution but mid-term optimism.

At the time of writing, the current quarterly contract BTCUSD0625 — expiring at the end of June — is trading at $58,000 levels with a premium of around $4,200, or 7.2%, over the index price.

OKEx BTC spot price, as of 8:00 am UTC on April 9. Source: OKEx, TradingView

OKEx trading data readings

Visit OKEx trading data page to explore more indicators. 

BTC long/short ratio

The long/short ratio has oscillated in the range of 1.15 to 1.40 for the past seven days. Notably, the ratio slipped in the rebound that started on Thursday, indicating that retail investors did not expect much from the bounce and went short against the trend. 

Moreover, the premium of USDT on OKEx remained above 2% throughout the week and reached 3.5% in the middle of the week, showing the massive demand for USDT in the Asian market. However, stablecoins are now seen to be flowing into DeFi yield farming, since more people are arbitraging between high returns in DeFi and low interests in traditional finance. The amount of stablecoins buying Bitcoin has not grown significantly.

Data collection time: 4/2 6:00 am UTC to 4/9 6:00 am UTC

The long/short ratio compares the total number of users opening long positions versus those opening short positions. The ratio is compiled from all futures and perpetual swaps, and the long/short side of a user is determined by their net position in BTC.

In the derivatives market, whenever a long position is opened, it is balanced by a short position. The total number of long positions must be equal to the total number of short positions. When the ratio is low, it indicates that more people are holding shorts.

BTC basis

The premium for the quarterly contract BTCUSD0625 had reached 9% during the rebound on Monday, but due to the lack of sustainability in the bounce, the premium quickly fell back to 6% on Wednesday and is currently hovering around 7%. The current premium level is still healthy and shows that the market is relatively bullish on the price of Bitcoin by the end of June. 

The premium for the bi-quarterly contract BTCUSD0924 expiring at the end of September is also holding at around 13% — a difference of more than $7,000 over the index price, which is a good indication of the market's confidence toward the mid-term outlook.

Data collection time: 4/2 6:00 am UTC to 4/9 6:00 am UTC

This indicator shows the quarterly futures price, spot index price and also the basis difference. The basis of a particular time equals the quarterly futures price minus the spot index price.

The price of futures reflects the traders' expectations of the price of Bitcoin. When the basis is positive, it indicates that the market is bullish. When the basis is negative, it indicates that the market is bearish.

The basis of quarterly futures can better indicate the long-term market trend. When the basis is high (either positive or negative), it means there's more room for arbitrage.

Open interest and trading volume

There was an overall downward trend in open interest, indicating market participants are not very interested in trading Bitcoin. This could be a reaction to the recent altcoin season, with more funds flowing to high-volatility small-cap names. However, the current BTC open interest of $2.78 billion is not much lower than last Friday's $2.94 billion.

Data collection time: 4/2 6:00 am UTC to 4/9 6:00 am UTC

Open interest is the total number of outstanding futures/swaps that have not been closed on a given day.

Trading volume is the total trading volume of futures and perpetual swaps over a specific period of time.

If there are 2,000 long contracts and 2,000 short contracts opened, the open interest will be 2,000. If the trading volume surges and the open interest decreases in a short period of time, it may indicate that a lot of positions are closed, or were forced to liquidate. If both the trading volume and open interest increase, it indicates that a lot of positions have opened.

BTC margin lending ratio

The margin lending ratio has shown very little change over the past week, varying only within a range of 7.3 to 8.8, suggesting that spot leveraged traders are not making many moves and are instead watching the price consolidate.

Data collection time: 4/2 6:00 am UTC to 4/9 6:00 am UTC

The margin lending ratio is spot market trading data showing the ratio between users borrowing USDT versus borrowing BTC in USDT value over a given period of time. 

This ratio also helps traders to look into market sentiment. Generally, traders borrowing USDT aim to buy BTC, and those borrowing BTC aim to short it. 

When the margin lending ratio is high, it indicates that the market is bullish. When it is low, it indicates that the market is bearish. Extreme values of this ratio have historically indicated trend reversals.

Trader insights

Robbie, OKEx Investment Analyst

Retail investors did not show a strong willingness to go long in the short term, and the rebound in prices has not been strong enough to breach the 58,500 USDT resistance level. Additionally, Bitcoin trading volumes have declined over the past week. This should also encourage caution since any rally without volume is unlikely to be sustainable. 

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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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