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Bitcoin Derivatives Futures Friday OKX Insights

BTC futures data shows retail traders focused on alts while Bitcoin consolidates

2021.04.30 Robbie Liu

Bitcoin recovered the $50,000 range, but market sentiment remains weak as BTC dominance falls and altcoins remain in the spotlight.

Over the past week, BTC created a double-bottom pattern near 48,000 USDT, followed by a quick rebound to 55,000 USDT levels per the OKX BTC spot price. The market leader is on track to print a green bar on the weekly chart after two consecutive weeks of declines. However, on a daily basis, BTC never recovered its 60-day moving average, which indicates that the rebound is not that strong — and low volumes reflect the lackluster market.

This week’s steady downward movement in Bitcoin’s dominance is a more concerning indicator for market participants. BTC dominance fell below the 50% mark for the first time since August 2018. Meanwhile, ETH prices continue to create new all-time highs, helping push the general altcoin market up.

Moreover, we’ve seen large options expiries pressuring the price over the last few weeks. The max pain price (i.e., price at which the largest number of options contracts are in loss) for options that expired today, April 30, was $54,000, according to data from CoinOptionsTrack, which was where the price had been moving around for a while and ultimately expired at.

Looking at OKX futures data, the current quarterly contract (BTCUSD0625), expiring at the end of June, is trading at $56,400 levels with a premium of around $2,100, or 4%, over the index price. 

OKX BTC spot price, as of 4:00 am UTC+8 on April 30. Source: OKX, TradingView

OKX trading data readings

Visit OKX trading data page to explore more indicators. 

BTC long/short ratio

Last week, we noted that the excessively high long/short ratio did not seem to be healthy. This week, the ratio saw a significant pullback, falling back from 1.9 to around 1.3, then rising up to 1.5 levels due to the rebound in the price. The recovery in the long/short ratio indicates a return of retail confidence, but many traders are still watching from the sidelines. 

Data collection time: 4/23 4:00 pm UTC+8 to 4/30 4:00 pm UTC+8

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

The premium for the quarterly contract BTCUSD0625 changed little during the week, basically moving in the 3%–4% range, which is a big drop from the beginning of April. However, it is a positive sign that the premium did not decline significantly when prices retreated to around 48,000 USDT in the midweek. Overall, the premium indicates that market participants are now remaining cautiously optimistic.

USDT premiums, on the other hand, have continued to move lower this week, indicating that buying interest in Asian markets declined since Bitcoin pulled back to 48,000 USDT.

Data collection time: 4/23 4:00 pm UTC+8 to 4/30 4:00 pm UTC+8

This 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 and trading volume

Open interest shows a clear consolidation during the week, oscillating within a range of $2.1 billion to $2.3 billion on OKX. This illustrates that the market is waiting and watching, and there is no large accumulation of positions in any direction. 

Data collection time: 4/23 4:00 pm UTC+8 to 4/30 4:00 pm UTC+8

Open interest is 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. 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.

BTC margin lending ratio

The margin lending ratio was quite flat during the week, never moving significantly after falling back to 8.0 levels in the midweek. This suggests that traders in the spot leveraged market are also waiting for a better price to step in.

Data collection time: 4/23 4:00 pm UTC+8 to 4/30 4:00 pm UTC+8

The margin lending ratio is spot market trading data showing the ratio between users borrowing USDT versus borrowing BTC in USDT value over a given period of time. 

This ratio also helps traders to look into market sentiment. Generally, traders borrowing USDT aim to buy BTC, and those borrowing BTC aim to short it. 

When the margin lending ratio is high, it indicates that the market is bullish. When it is low, it indicates that the market is bearish. Extreme values of this ratio have historically indicated trend reversals.

Trader insights

Robbie, OKX Market Analyst

Bitcoin has still not managed to reverse its weak price trend, trading below its 60-day moving average through the week. However, during this period, ETH made a new high of 2,800 USDT, indicating that traders are shifting their attention to altcoins. 

On the Bitcoin dominance chart, the ratio is likely to slip further to near 40% if the market leader cannot reclaim the key 50% level in the near term. This would likely push altcoins into a frenzy. However, major DeFi and Layer 2-related tokens are likely to stay bullish along with ETH.

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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.