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Bitcoin Derivatives OKX Insights Trading Futures Friday

Bitcoin bulls still have hope according to OKEx BTC futures data

2021.12.04 Hunain Naseer

Despite BTC’s failure to breach 60,000 USDT, bulls have reasons to stay in the game.

The retail view was bullish last week, as highlighted in the previous edition of Futures Friday. Since then, BTC rose about 10%, going up from lows around 53,500 USDT to highs above 59,000 USDT on Thursday.

The market leader suffered losses on Thursday and today, however, and is currently trading around 56,300 USDT levels per the OKEx BTC/USDT price.

Looking at it from a technical analysis perspective, the market leader has been struggling to regain bullish momentum apart as all attempts to the upside have been shut down by the resistance at 60,000 USDT. However, terming the current market as “bear” would be premature at this stage.

In terms of Bitcoin futures contracts, the quarterly contract on OKEx — BTCUSD1231, expiring at the end of this month — is trading at around $56,600 with a premium of $340 — marginally higher than last week’s $290. The BTCUSD0325 contract, expiring in March next year, is trading at $58,100, and its premium, at $1,840, is also about $100 higher than last week’s.

These premiums are simply reflecting the fact that BTC is currently trading above a higher support compared to last week and the market is not overly bullish at the moment.

OKEx BTC spot price on Dec. 3, with blue arrows marking Fridays. Source: OKEx, TradingView

OKEx trading data readings

Below we take a look at several indicators to better understand market sentiment. You can visit OKEx’s trading data page to explore more indicators.

BTC long/short ratio shows retail is hard to shake off

Last week we noted how the long/short ratio had spiked above 2.0 — an overly bullish figure that could mean the market needs to shake off some of the longs before resuming the uptrend.

That did materialize somewhat as BTC has failed to make any meaningful strides and has remained range-bound. As a result, some of these longs have reduced, but at the current value of 1.80, the bullishness is far from gone.

In fact, the current value is healthier, but we could see another test of the lows around 1.4 before BTC can be ready for the next leg.

BTC futures long/short ratio on OKEx with markings highlighting values

The long/short ratio compares the total number of users opening long positions versus those opening short positions. The ratio is compiled from all futures and perpetual swaps, and the long/short side of a user is determined by their net position in BTC.

In the derivatives market, whenever a long position is opened, it is balanced by a short position. The total number of long positions must be equal to the total number of short positions. When the ratio is low, it indicates that more people are holding shorts.

BTC basis continues to show upside potential

The basis, or premium, for BTC futures contracts reflects the market’s future projections. Last week, we noted how the premium had fallen to very low levels, and even though there was interim relief during the week, the values are only marginally better this week.

While these low basis values are indicative of the weak bullish sentiment, they also hint at the possibility of a reversal given how bullish projections are far from overheated.

BTC quarterly futures contract basis on OKEx with markings highlighting values

The BTC basis indicator shows the quarterly futures price, spot index price and also the basis difference. The basis of a particular time equals the quarterly futures price minus the spot index price.

The price of futures reflects the traders’ expectations of the price of Bitcoin. When the basis is positive, it indicates that the market is bullish. When the basis is negative, it indicates that the market is bearish.

The basis of quarterly futures can better indicate the long-term market trend. When the basis is high (either positive or negative), it means there’s more room for arbitrage.

Open interest continues to show strength

After peaking at around $2.77 billion in early November, the BTC futures open interest on OKEx has continued to see drops. However, the $2 billion figure has shown relative strength and has acted as support for a couple of weeks now.

This is a positive sign for the bulls, as it indicates the market’s continued interest in BTC.

BTC futures open interest and volume on OKEx with markings highlighting values

Open interest, or OI, is the value of the total number of outstanding futures/swaps that have not been closed on a given day.

Trading volume is the total trading volume of futures and perpetual swaps over a specific period of time.

If there are 2,000 long contracts and 2,000 short contracts opened, the open interest will be 2,000 multiplied by the value of each underlying contract. If the trading volume surges and the open interest decreases in a short period of time, it may indicate that a lot of positions are closed, or were forced to liquidate. If both the trading volume and open interest increase, it indicates that a lot of positions have opened.

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Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.



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