{"id":444392,"date":"2022-05-09T23:21:47","date_gmt":"2022-05-09T20:21:47","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/pro-traders-adopt-a-hands-off-approach-as-bitcoin-price-explores-new-lows\/"},"modified":"2022-05-09T23:21:47","modified_gmt":"2022-05-09T20:21:47","slug":"pro-traders-adopt-a-hands-off-approach-as-bitcoin-price-explores-new-lows","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/pro-traders-adopt-a-hands-off-approach-as-bitcoin-price-explores-new-lows\/","title":{"rendered":"# Pro traders adopt a hands-off approach as Bitcoin price explores new lows"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a35783f2b33b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a35783f2b33b\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/pro-traders-adopt-a-hands-off-approach-as-bitcoin-price-explores-new-lows\/#%E2%80%9D_Pro_traders_adopt_a_hands-off_approach_as_Bitcoin_price_explores_new_lows_%E2%80%9C\" >&#8221; Pro traders adopt a hands-off approach as Bitcoin price explores new lows &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/pro-traders-adopt-a-hands-off-approach-as-bitcoin-price-explores-new-lows\/#Bitcoins_futures_premium_stabilized_at_25\" >Bitcoin\u2019s futures premium stabilized at 2.5%<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/pro-traders-adopt-a-hands-off-approach-as-bitcoin-price-explores-new-lows\/#Options_traders_stepped_deeper_into_the_%E2%80%9Cfear%E2%80%9D_zone\" >Options traders stepped deeper into the &#8220;fear&#8221; zone<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/pro-traders-adopt-a-hands-off-approach-as-bitcoin-price-explores-new-lows\/#The_bullish_sentiment_of_margin_markets_peaked\" >The bullish sentiment of margin markets peaked<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Pro_traders_adopt_a_hands-off_approach_as_Bitcoin_price_explores_new_lows_%E2%80%9C\"><\/span>&#8221; Pro traders adopt a hands-off approach as Bitcoin price explores new lows &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-2a0745c6>Bitcoin\u2019s (BTC) current 20% drop over the past four days has put the price at its lowest level in nine months and while these movements might seem extraordinary, quite a number of large listed companies and commodities faced a similar correction. For example, natural gas futures corrected 15.5% in four days and nickel futures traded down 8% on May 9.<\/p>\n<p>Other casualties of the correction include multiple $10 billion and higher market capitalization companies that are listed at U.S. stock exchanges. Bill.com (BILL) traded down 30%, while Cloudflare (NET) presented a 25.4% price correction. Dish Network (DISH) also faced a 25.1% drop and Ubiquiti&#8217;s (UI) price declined by 20.4%.<\/p>\n<p>Persistent weak economic data indicates that a recession is coming our way. At the same time, the U.S. Federal Reserve reverted its expansionary incentives and now aims to reduce its balance sheet by $1 trillion. On May 5, Germany also reported factory orders declining by 4.7% versus the previous month. The U.S. unit labor costs presented an 11.6% increase on the same day.<\/p>\n<p>This bearish macroeconomic scenario can partially explain why Bitcoin and risk assets continue to correct but taking a closer look at how professional traders are positioned can also provide useful insight.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Bitcoins_futures_premium_stabilized_at_25\"><\/span>Bitcoin\u2019s futures premium stabilized at 2.5%<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To understand whether the recent price action reflects top traders&#8217; sentiment, one should analyze Bitcoin&#8217;s futures contracts premium, otherwise known as the &#8220;basis rate.&#8221;<\/p>\n<p>Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges. The three-month futures contract trades at a 5% or lower annualized premium whenever these pro traders flip bearish.<\/p>\n<p>On the other hand, a neutral market should present a 5% to 12% basis rate, reflecting market participants&#8217; unwillingness to lock in Bitcoin for cheap until the trade settles.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/89e89e9e-d932-46c8-97a0-a29be9996d04.png\"><figcaption style=\"text-align: center;\"><em>Bitcoin 3-month futures premium. Source: laevitas.ch<\/em><\/figcaption><\/figure>\n<p>The above data shows that Bitcoin&#8217;s futures premium has been lower than 5% since April 6, indicating that futures market participants are reluctant to open leverage long positions.<\/p>\n<p>Even with the above data, the recent 20% price correction was not enough to drive this metric below the 2% threshold, which should be interpreted as positive. Bulls certainly do not have a reason to celebrate, but there are no signs of panic selling from the viewpoint of futures markets.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Options_traders_stepped_deeper_into_the_%E2%80%9Cfear%E2%80%9D_zone\"><\/span>Options traders stepped deeper into the &#8220;fear&#8221; zone<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To exclude externalities specific to the futures contracts, traders should also analyze the options markets. The most simple and effective metric is the 25% delta skew, which compares equivalent call (buy) and put (sell) options. <\/p>\n<p>In short, the indicator will turn positive when &#8220;fear&#8221; is prevalent because the protective put options premium is higher than the call (bullish) options. On the other hand, a negative 25% skew indicates bullish markets. Lastly, readings between negative 8% and positive 8% are usually deemed neutral.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/af48108a-a96e-4781-bc10-09303b5f5231.png\"><figcaption style=\"text-align: center;\"><em>Deribit Bitcoin 30-day options 25% delta skew. Source: laevitas.ch<\/em><\/figcaption><\/figure>\n<p>The above chart shows that Bitcoin option traders have been signaling &#8220;fear&#8221; since April 8 after BTC broke below $42,500. Unlike futures markets, options primary sentiment metric showed a worsening condition over the past four days as the 25% delta skew currently stands at 14.5%.<\/p>\n<p>To put things in perspective, the last time this options market&#8217;s &#8220;fear &amp; greed&#8221; indicator touched 15% was on January 28, after Bitcoin price traded down 23.5% in four days.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_bullish_sentiment_of_margin_markets_peaked\"><\/span>The bullish sentiment of margin markets peaked<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Traders should also analyze margin markets. Borrowing crypto allows investors to leverage their trading position and potentially increase their returns. For example, a trader can borrow Tether (USDT) and use the proceeds to boost their Bitcoin exposure.<\/p>\n<p>On the other hand, borrowing Bitcoin allows one to bet on its price decline. However, the balance between margin longs and shorts is not always matched.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/21e7cb82-1ed3-4174-8bdf-fd36880e4498.png\"><figcaption style=\"text-align: center;\"><em>OKEx USDT\/BTC margin lending ratio. Source: OKEx<\/em><\/figcaption><\/figure>\n<p>Data shows that traders have been borrowing more Bitcoin recently, as the ratio declined from 24.5 on May 6 to the current 16.8. The higher the indicator, the more confident professional traders are with Bitcoin&#8217;s price.<\/p>\n<p>Despite some recent Bitcoin borrowing activity aimed at betting on the price downturn, margin traders remain mostly optimistic, according to the USDT\/BTC lending ratio. Typically, numbers above five reflect bullishness and the recent 24.5 peak was the highest level in more than six months.<\/p>\n<p>According to derivatives metrics, Bitcoin traders are afraid of a deepening correction as macroeconomic indicators deteriorate. However, investors also expect a potential crisis in traditional markets, so Bitcoin&#8217;s 20% correction merely follows that of broader risk assets.<\/p>\n<p>On a positive note, there are no signs of leverage short (negative) bets using margin or futures, meaning there is little conviction from sellers at current price levels.<\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>author<\/em><\/a><em> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/pro-traders-adopt-a-hands-off-approach-as-bitcoin-price-explores-new-lows\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Pro traders adopt a hands-off approach as Bitcoin price explores new lows &#8220; Bitcoin\u2019s (BTC) current 20% drop over the past four days has put the price at its lowest level in nine months and while these movements might seem extraordinary, quite a number of large listed companies and commodities faced a similar correction&#8230;.<\/p>\n","protected":false},"author":1,"featured_media":444393,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDUvM2JmMDZiYWQtYmI2My00NzJmLTk2ZmMtYzdiODY0ZTc3ZTc4LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,81209,74937,74863,74860,75012,75846,77595,74939,70550,73785,70359],"class_list":["post-444392","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-bitcoin-options","tag-bitcoin-price","tag-cryptocurrencies","tag-cryptocurrency-exchange","tag-derivatives","tag-futures","tag-lending","tag-market-analysis","tag-federal-reserve","tag-markets","tag-stocks"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/444392","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=444392"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/444392\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/444393"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=444392"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=444392"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=444392"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}