- Bitcoin derivative data and the long-to-short ratio at the exchanges show that traders are still bullish on the BTC price.
- However, on-chain data shows aggressive selling by Bitcoin miners and capitulation which is a concerning sign.
In this month of November 2022, the Bitcoin price is down by more than 20 percent amid all the chaos created by the collapse of the crypto exchange FTX. With FTX filing for bankruptcy on November 11, Bitcoin bears have been in major control with Bitcoin trying to hold above $16,000 levels.
However, on Monday, November 28, there was a huge transfer of 127,000 Bitcoins from a Binance Gold wallet. This massive Bitcoin transfer was enough to create fear, uncertainty, and doubt (FUD), but Binance chief Changpeng Zhao announced that it was part of an auditing process.
The Bitcoin derivatives and margin market offer some insights into how professional traders are positioned. This is because it allows investors to borrow digital assets in order to leverage their positions.
As the Bitcoin price dipped to $15,500 levels earlier this month, professional traders increased their leveraged longs. This is quite visible in the below chart as the OKX traders’ margin lending ratio increased from Nov. 20 to Nov. 27.
Additionally, the long-short report shows that professional traders continue to maintain their long positions even as the BTC price faces strong resistance at $16,700. In the period between Nov. 21 and Nov. 28, the long-short ratio for Binance traders improved from 1.00 to 1.05.
During the seven-day period, this ratio saw a more substantial increase as the indicator moved from 1.01 to 1.08. However, on the crypto exchange OKEx, the metric slightly decreased from 0.99 to 0.96. Currently, the Bitcoin price is finding support at $16,200 showing that traders are turning partly bullish. The derivatives data also shows strong support at $16,000.
Some concerns for Bitcoin investors
One of the major concerns for Bitcoin investors, for now, is that the BTC miners have been selling their Bitcoin holdings aggressively throughout November. This shows signs of heavy miner capitulation which could lead to a further downfall in the BTC price.
Miner capitulation occurs when the Bitcoin miners sell their holdings in order to cover costs and are eventually moved off the network. The continued selling pressure on Bitcoin throughout this year has put miners in this position.
Also, the decline in the Bitcoin hashrate is another signal flashing towards worry. On a 7-day moving average, the Bitcoin hashrate is nearly 14 percent off its all-time highs. During the next difficulty adjustment, a week from now, the Bitcoin mining difficulty will be -9 percent from here. This also hints toward strong miner capitulation.
Bitcoin miners have been selling relatively aggressively.
Combined with the hash rate decline and thus today’s hash ribbon bearish cross, this indicates we are indeed in a period of miner capitulation. pic.twitter.com/vVnqetYbn9
— Will Clemente (@WClementeIII) November 28, 2022
Also, some market experts believe that the contagion from the FTX collapse could spread further. Cici Lu, the founder at Venn Link Partners, said:
The credit contagion is far from over. There’s still very low visibility, in the second and third layers of counterparty risk, in terms of who’s exposed to what.
Last week, a Bloomberg analyst warned that Bitcoin still hasn’t found the bottom and that it could correct another 40 percent from the current levels all the way to $10,000.
