Bitcoin derivatives data reflects the mixed sentiments of traders below $ 17,000

Bitcoin (BTC) lost 25.4% in 48 hours, hitting a low of $ 15,590 on November 9, as investors rushed to close positions after the second largest cryptocurrency exchange, FTX, shut down. withdrawals. More importantly, levels below $ 17,000 were last seen nearly two years earlier, and the fear of contagion became apparent.

The move liquidated long (bullish) positions worth $ 285 million, leading some traders to predict a potential downside of $ 13,800.

As described by independent market analyst Jaydee_757, the downtrend continues to exert its pressure, with $ 17,200 as the resistance level. However, this analysis does not provide any guarantee that the final low of $ 13,800 will be reached.

Curiously, the price action coincided with improving conditions for global equity markets on October 4, as the S&P 500 index gained 6.4% between November 10 and November 11, and the Nasdaq Composite. heavily technological, it gained 9.5%. So, at least from a technical point of view, Bitcoin has completely decoupled from traditional finance.

Further uncertainty about Bitcoin was caused by Grayscale Bitcoin Trust shares trading on over-the-counter equity markets after the fund’s $ 11.4 billion discount on its assets exceeded 40%.

As noted by Vance Spencer, the implied price of BTC according to the trading of the funds is less than $ 9,000 and the pressure should continue if some holders use their shares as collateral for loans.

However, the negative sentiment that led to Bitcoin dipping below $ 20,000 does not mean that professional investors are bearish at current price levels.

Margin traders did not close their longs

Monitoring the margin and options markets provides excellent insight into how professional traders are positioned, allowing investors to borrow cryptocurrency to leverage their trading position.

For example, you can increase your exposure by borrowing stablecoins to buy an additional position in Bitcoin. On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its falling price. Unlike futures contracts, the balance between long and short margins is not always matched.

OKX USDT / BTC Margin Loan Ratio. Source: OKX

The chart above shows that the OKX Traders Margin Lending Ratio increased from November 8-10, signaling that traders did not close their long positions on leverage despite the 25.4% price correction.

Furthermore, the metric continues to favor stablecoin lending by a large margin, indicating that traders have maintained bullish positions.

The options markets have returned to the downside

Traders should scan options markets to see if Bitcoin can claim support of $ 18,500. The 25% delta skew is a significant signal whenever arbitrage desks and market makers are overloading upside or downside protection.

The indicator compares similar call (buy) and put (sell) options and will turn positive when fear prevails because the protective premium of put options is higher than risk call options.

The skew indicator will move above 10% if traders fear a drop in the price of Bitcoin. On the other hand, generalized arousal reflects a 10% negative slope.

Bitcoin 60 day options 25% delta skew: Source: Laevitas

As shown above, the 25% skew delta had been below 10% since October 26, but quickly moved above that threshold on November 8, suggesting that options traders were assessing a greater risk of unexpected dumping of stocks. prices.

Whenever this metric exceeds 10%, it signals that traders are fearful and reflects the lack of interest in offering downside protection.

Related: Crypto.com CRO is in trouble, but a 50% price bounce is at stake.

The FUD layoff doesn’t happen overnight

Despite the bearish Bitcoin options indicator, the OKX margin lending rate showed that whales and market makers hold bullish bets. The fear of contagion could explain the mixed feeling as investors struggle to interpret the recent movements of the Crypto.com exchange, including an “accidental” transfer of 320,000 Ether (ETH) to Gate.io.

Analyst Holger Zschaepitz’s post describes the current sentiment of investors as reluctant to take risks on centralized exchanges offering similar products and services since the now failed FTX.

As a result, derivatives are reflecting low confidence in regaining support of $ 18,500 until further data shows that the liquidity of the cryptocurrency ecosystem has been restored.