Traders buy the Bitcoin dip even as Evergrande’s implosion rocks stock markets

Bitcoin (BTC), investors are concerned by the growing speculation that China’s second largest property developer, Evergrande Group will default on its $300 Billion debts. These fears are evident in the global equity markets, which saw a 1.5% – 3% drop at the market open this morning.

Despite the price movement, BTC outflows (net withdrawals from exchanges) has maintained a multi-month trend on Coinbase Pro.

Every exchange has a unique user profile, traders also know. Bybit liquidations are more extreme than FTX which has more conservative clients.

Consider, for instance, the drop below $43,000 today, which caused a $1Billion long contracts liquidation by Bybit, despite there being $2.34 billion of futures open interest. This is less than Binance’s $3.66 Billion liquidations and FTX’s $2.51 Billion liquidations.

Bitcoin futures liquidations past 24 hours, Sept. 20. Source: Bybt.com

Data above shows that Bybit traders take more risks and use higher leverage. The 11% daily negative movement was proportionately less severe for Binance and FTX derivatives traders.

Pro traders remain neutral-to-bullish

The futures premium (or basis) is a measure of how bullish or bearish professional trader are inclined. This indicator shows the difference between current spot market levels and longer-term futures contracts.

A 5% to 15% annualized premium can be expected in healthy markets. This is known as contango. Sellers are able to demand more money in order to delay settlement.

This is known as “backwardation” and a red alert will be issued if the indicator turns negative or fades.

Annualized Bitcoin 3-month Futures. Source: Laevitas.ch

The current 7% annualized premium, as shown above, is neutral but equal to the average for the previous month. This indicator would have fallen below 5% if pro traders had become bearish or worried.

The long-to-short ratio of top traders shows buying activity

To accurately measure the professional trader’s position, investors should keep an eye on top traders’ long to short ratios at major crypto exchanges. This measure provides an accurate picture of traders’ net position, combining data from multiple futures markets.

Binance and OKEx top Bitcoin traders in long-to-short ratio. Source: Bybt.com

Each exchange collects data on top traders in a different way. This is because there are many ways to measure clients’ net exposure. Comparisons between providers should therefore be based on percentage changes rather than absolute numbers.

The long-to-short ratio of OKEx top traders rose from a 8% position favoring shorts to 54% today, the highest in ten days. Binance derivatives traders maintained a consistent 10% ratio in favor of longs, despite the Bitcoin price decline.

Both data show that retail traders were most likely to be the most affected by high-leverage bullish position. Pro traders, on the other hand, either maintained their positions or took advantage to increase their long positions at a discounted rate.

Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.

https://cointelegraph.com/news/traders-buy-the-bitcoin-dip-even-as-evergrande-s-implosion-rocks-stock-markets