This is an impressive move considering that the BTC price had been trading in a sideways range for weeks. Whatever the reasons for the increase, one would expect the major traders and arbitrageurs to follow the trend.
Interestingly enough, this is not the case as many of the top traders opened short positions when BTC started moving 15%. Even if a trader has no confidence in a possible retest of the all-time high of $42,000, it seems risky to open short positions when Ether (ETH) breaks through the $1,600 mark.
Bitcoin and Ether USD prices at Bitstamp. Source: Digital asset data
Note that the two main cryptocurrencies are largely traded in tandem, although investors may switch from BTC to Ether because of its role in decentralized finance, explosive price growth, and the appeal of startup Eth2.
Data from TheTie, an alternative social analytics company, also shows that Google searches for cryptocurrencies recently reached an all-time high. According to the same source, activity on social media for cryptocurrencies has increased by 135% in the past three months.
In addition to this bullish scenario for the global payments giant, Visa announced that it is aggressively pursuing crypto-currency partnerships, including debit cards and digital banking.
Finally, the recent release of 15,200 BTC ($515 million) on Coinbase was considered a bullish signal by CryptoQuant’s analysts. According to CryptoQuant, this exit indicates an over-the-counter transaction by institutional investors who could be accumulating BTC in cold wallets.
These upward signals contrast with traders’ long and short positions in the stock market. This indicator is calculated by analyzing a client’s consolidated position in spot, open-end and futures contracts and provides a clearer picture of the upward or downward trend for professional traders.
In this regard, there are occasional discrepancies in the methodologies of different exchanges, so observers should look at changes rather than absolute numbers.
The best traders in BTC trade with a ratio of long and short positions. Source: Bybt.com.
Over the past three days, major traders have increased their short positions in all the markets analyzed. While large traders, market makers and arbitrage services hold positions in their cold portfolios or GBTC grey funds, the ratio of long to short positions shows that there is no certainty that BTC will break the $38,000 mark and aim for $40,000 in the near term.
Moreover, Ether’s recent outperformance may be supported by less exposure to BTC by top traders. This makes all the more sense if we take into account the next ETH listing on the CME on February 8. It is only natural that the interest of institutional investors is increasing.
The best traders may also have delisted their BTCs in search of better profit opportunities, so assuming they all opened short positions is a hasty conclusion.
If these large traders are indeed taking short positions in BTC, the derivatives markets will take note. To refute this theory, Friday’s $1 billion option expiration is still in favor of the bulls, who currently have a huge incentive to push the price above $40,000.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.
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