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Bitcoin Derivatives OKEx Insights Futures Friday

BTC futures data shows retail investors are uncertain about short-term price action

2021.05.07 Robbie Liu

Bitcoin is still struggling to recover its 60-day moving average, but major altcoins remain hot.

Bitcoin's price has had a volatile week, as concerns around potentially rising interest rates saw the three major U.S. stock indexes fall sharply on Tuesday, bringing BTC down by 7%. After testing lows around 53,000 USDT levels, per the OKEx BTC spot price, BTC bounced back 8% on Wednesday but has struggled to stay above the 58,000 USDT level.

The market leader is now consolidating, with Bitcoin's dominance falling another 7% this week to around 45%, which is the lowest level since July 2018. Meanwhile, major altcoins such as ETH, ETC and BCH continue to post new highs. 

On the options market, according to data from CoinOptionsTrack, the max pain price (i.e., the price at which the largest number of options contracts are in loss) for options that expired today, May 7, was $56,000, which is very close to the current price. 

In last week's Futures Friday, we noted that Bitcoin's dominance is likely to slip further, to near 40%, which would likely push altcoins into a frenzy. This week, since Bitcoin is still struggling to recover its 60-day moving average — a key threshold on the daily chart — trading altcoins remains a good strategy for market participants. 

Looking at OKEx futures data, the current quarterly contract (BTCUSD0625), expiring at the end of June, is trading at $57,850 levels with a premium of around $1,880, or 3.35%, over the index price. 

OKEx BTC spot price, as of 4:00 pm UTC+8 on May 7. Source: OKEx, TradingView

OKEx trading data readings

Visit OKEx trading data page to explore more indicators. 

BTC long/short ratio

The long/short ratio continued its oscillating trend during the week in the range between 1.3 and 1.7. Tuesday's pullback pushed the ratio down to 1.3, at one point, but the following rebound was also very quick. This shows that retail investors are still maintaining their optimism about the market. 

In addition, the funding rates on perpetual swaps shot up to 0.1% for every eight hours on Tuesday and Thursday, but the subsequent price corrections brought the rates back to the normal range again. 

Data collection time: 4/30 4:00 pm UTC+8 to 5/7 4:00 pm UTC+8

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 was also relatively stable. Tuesday's decline sent it down to a low of 2.3%, at one point, but the following quick rebound in prices brought it back above 3%. This indicates that the market trend is still uncertain and retail investors do not have high expectations for prices in the near term. 

Data collection time: 4/30 4:00 pm UTC+8 to 5/7 4:00 pm UTC+8

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

Due to the consolidation trend, open interest was running flat during the week. Tuesday's decline caused the OI to fall from $2.31 billion to $2.17 billion, but it has picked up gradually since. The current OI of $2.5 billion is back near Monday's range. 

Data collection time: 4/30 4:00 pm UTC+8 to 5/7 4:00 pm UTC+8

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 only ratio that is slowly rising is the margin lending ratio, which has climbed from a low of 7.1 at the end of last week to its current level of 8.6. This indicates that the spot leverage market is starting to buy more BTC during the consolidation phase, which shows their bullish attitude. 

Data collection time: 4/30 4:00 pm UTC+8 to 5/7 4:00 pm UTC+8

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 Market Analyst

BTC has failed to recover its 60-day moving average this week, which has left market participants wary of short-term price movement. The price is currently trading in a narrow range between 55,000 USDT and 58,000 USDT, while the next support level is located at 52,800 USDT. 

Bitcoin's dominance is also not showing signs of a reversal, and we can expect altcoins to continue their run, for now.

OKEx Insights presents market analyses, in-depth features and curated news from crypto professionals.

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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.