Source: Cointelegraph Original: "{title}"
Despite Bitcoin (BTC) reaching its highest price in three weeks at $88,173, traders on Bitfinex reduced their leveraged long (bullish) margin positions by over $100 million between April 17 and 19.
This reduction has sparked market speculation that Bitcoin whales may anticipate a price correction or at least lack confidence in further short-term increases. Let’s analyze this possibility closely.
On April 21, after U.S. President Trump publicly discussed the possibility of replacing Federal Reserve Chairman Jerome Powell, Bitcoin broke through $86,000. Trump criticized Powell for not acting quickly enough to ease monetary policy.
Additionally, as the global trade war escalates, particularly considering the ongoing uncertainty in U.S.-China relations, investors' risk aversion is increasing.
The logic behind the profit-taking in the margin market is particularly noteworthy, as Bitcoin prices have remained below $90,000 since early March, prompting some investors to question whether Bitcoin can continue to decouple from traditional markets.
The S&P 500 futures fell 1.1% from the closing price on April 17, while escalating U.S. political tensions further weakened investor confidence.
Between April 10 and 17, Bitcoin margin long positions on Bitfinex remained unchanged at 80,400 BTC, indicating that bullish traders still maintained strong confidence near a seven-month high. However, even as Bitcoin prices climbed back above $83,000, these traders chose to reduce their leveraged long positions by 1,250 BTC (equivalent to $106 million).
Historically, Bitfinex traders are known for quickly opening or closing large Bitcoin margin positions, suggesting that it is typically large players and major arbitrage desks driving these changes.
However, it is not accurate to say that Bitfinex whales have turned bearish, as their current total margin long positions stand at 79,136 BTC, worth $6.86 billion, while margin shorts are only 326 BTC.
The significant difference between long and short positions can be attributed to the platform's notably low annual interest rate of 2%. In contrast, traders using two-month Bitcoin futures currently face an annual premium of 5.7%.
This discrepancy creates arbitrage opportunities, allowing traders to open Bitcoin longs in the margin market while simultaneously selling an equivalent position in the BTC futures market to capture the spread.
Moreover, Bitcoin prices are not always directly correlated with changes in leveraged positions on Bitfinex. For instance, during the two weeks ending March 10, whales increased their margin longs by 13,454 BTC, while Bitcoin prices fell from $95,930 to $67,076 during the same period.
Similarly, in the two weeks ending December 16, 2024, margin longs decreased by 11,047 BTC, while Bitcoin prices rose from $96,200 to $106,400.
However, in the long term, these seasoned investors have demonstrated excellent market timing ability. For example, on December 23, 2024, Bitcoin prices ultimately fell below $58,000, while margin long positions had decreased by 26% in the preceding 30 days.
This pattern suggests that these traders typically achieve high profits, but compared to ordinary investors, they also exhibit significantly higher risk tolerance and patience.
In summary, the $106 million reduction in BTC margin longs is not sufficient evidence to prove that professional traders are turning bearish.
As Cointelegraph previously reported, on-chain data shows that despite price declines, the number of Bitcoin whales has continued to grow in March and April, indicating accumulation behavior.
Related: Data shows Bitcoin whales and experts continued to accumulate in April
This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in the article are solely those of the author and do not necessarily reflect or represent the views and positions of Cointelegraph.
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