Bitcoin (BTC) showed weakness on August 15, posting a 5% loss after testing the $25,000 resistance. The move liquidated over $150 million in leveraged long positions and led some traders to predict a return to yearly lows in the $18,000 range.
The price action coincided with deteriorating conditions for tech stocks, including Chinese giant Tencent, which is expected to post its first-ever quarterly earnings decline. Analysts said the Chinese gaming and social media conglomerate is expected to post quarterly profits of around $19.5 billion, down 4% from a year earlier.
Additionally, on August 16, investment bank Citi reduced the sell recommendation of Zoom Video Communications (ZM), adding that the stock was “high risk”. Analysts said tough post-COVID dynamics, along with additional competition from Microsoft Teams, potentially caused ZM shares to drop 20%.
Overall bearish sentiment continues to plague crypto investors, a move described by influencer and trader @ChrisBTCbull, who mentioned that a single rejection at $25,000 caused traders to post targets below $17,000. .
After #Bitcoins didn’t break the price to $25,000, all CTs started writing again about the price from $16,000 to $17,000
I think it’s time to open long#trade
—Chris (@ChrisBTCbull) August 16, 2022
Margin Traders Remain Bullish Despite $25,000 Rejection
Monitoring the margin and options markets provides excellent information to understand the positioning of professional traders. For example, a negative reading would occur if whales and market makers reduced their exposure as BTC approached the $25,000 resistance.
Margin trading allows investors to borrow cryptocurrency to leverage their trading position, thereby increasing returns. For example, one can increase exposure by borrowing stablecoins to buy an additional bitcoin position.
On the other hand, Bitcoin borrowers can only sell the cryptocurrency because they are betting on its price falling. Unlike futures contracts, the balance between long and short margins is not always equal.
The chart above shows OKX traders’ margin lending ratio remained relatively flat near 14 while Bitcoin price jumped 6.3% in two days only to be rejected after hitting resistance at 25,200. $.
Moreover, the metric remains bullish favoring stable borrowing with a wide margin. As a result, professional traders maintained their bullish positions and no further bearish margin trades emerged as Bitcoin retraced 5.5% on August 16.
Related: Bitcoin miners get 27% less BTC after 3 months of heavy sales
Options markets take a neutral stance
There is uncertainty over whether Bitcoin will make another run towards the $25,000 resistance, but the 25% delta bias is a telltale sign whenever arbitrage desks and market makers overcharge for protection. upwards or downwards.
The indicator compares similar call (call) and put (sell) options and turns positive when fear prevails, because the protection premium of put options is higher than that of risky call options.
The bias indicator will move above 10% if traders fear a Bitcoin price crash. In contrast, generalized excitement reflects a negative bias of 10%.
As noted above, the 25% delta bias has barely budged since Aug. 11, hovering between 5% and 7% most of the time. This range is considered neutral as options traders price a similar risk of unexpected pumps or dumps.
If professional traders went into a “scared” mood, this metric would have topped 10%, reflecting a lack of interest in offering downside protection.
Despite the neutral Bitcoin Options indicator, the OKX Margin Lending Rate showed whales and market makers maintaining their bullish bets following a 5.5% decline in BTC price on August 16. For this reason, investors should expect a retest of the $25,000 resistance as soon as the global macroeconomic conditions improve.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.