Bitcoin fell from around $ 60,000 to nearly $ 50,000 this week, but hasn’t strayed from retail interest, according to OKEx’s Robbie Liu.
The investment analyst cited renewed buying activity near the $ 50,000 level among retail investors, confirmed by the rising long / short ratio and rising USDT premium in the Asian market. The long / short ratio compares the total number of users entering long positions with those entering short positions.
Bitcoin rose more than 7 percent after testing the $ 50,000 area as a support.
Bitcoin Futures Premium
He also highlighted BTCUSD0326, a high-volume Bitcoin futures contract that expires in June and is now trading near the $ 56,200 level, about 5 percent above Bitcoin’s spot price. The prices usually follow the bidding of the futures.
“Last Friday, BTCUSD0625’s premium rose to 8% before it was quickly traced,” warned Mr. Liu. “The premium is now back at 5%, which indicates weak market expectations for the price at the end of June. However, with the expiration date still a long way off, a price hike could quickly drive the premium up. “
The interest of private customers in Bitcoin increased with the continuing risk sentiment among institutional investors. Signs of a resurgent US economy, rising bond yields and looming inflation led investors to turn their backs on so-called pandemic winners, including Bitcoin, and look for opportunities in markets that had suffered badly during the coronavirus lockdown.
As a result, manufacturers, banks, and retail sectors outperformed technology stocks. The US dollar index also rose as longer-term government bond yields rose.
“Retail investors have apparently been trying to bottom out for the past two days, while institutions generally want to reduce risk. USDT 50,000 is now becoming an important level to watch, ”Liu said of Bitcoin.
“The current event-driven week ends weakly as the pressure to sell continues after the announcement by Tesla. However, with the massive expiration of options, we could see BTC moving more independently over the weekend, ”he added.
Margin Lending Ratio
Further support for the $ 50,000 bottom theory came from Bitcoin’s margin-lending ratio. This is the ratio between users who borrow USDT pegged to USDT and BTC who borrow USDT denominated BTC over a period of time. Usually traders borrow USDT to buy Bitcoin and those who buy BTC try to sell it.
“The margin-lending ratio also bucked the trend during the BTC retracement, rising from around 8.5 to a high of 10.5 in the past two days,” Liu said.
“This also shows that retail investors are convinced of the floor price near USDT 50,000,” he added.
Photo by André François McKenzie on Unsplash