Bitcoin (BTC) has experienced a significant decline, triggering calls among the crowd to “buy the dip” as sentiment in the retail industry remains optimistic. At Binance, three out of every four traders hold long positions in the leading cryptocurrency, which could result in a short-term squeeze on the long side.
Finbold retrieved the long-to-short ratio data for Binance over a 24-hour period from CoinGlass, measuring unique accounts rather than trading volume. Notably, as of June 25th, 76.69% of Bitcoin traders on the leading cryptocurrency exchange held long positions. In terms of this market alone, the ratio reached 3.29:4. Binance accounts for over 50% of global Bitcoin trading volume.
However, there is a noticeable difference between the number of unique accounts and the amount deployed in these positions. The 24-hour long-to-short ratio based on trading volume shows a different scenario, with $8.67 billion in short positions surpassing $8.58 billion in long positions.
This suggests that while the retail industry is positioned with bullish long positions, the stance of derivative whales leans slightly towards bearishness. Therefore, these whales may decide to liquidate a significant number of retail users’ Bitcoin bets.
Such liquidation could lead to a long-term squeeze, pushing Bitcoin prices to lower levels and rewarding Bitcoin whales who have short positions. It is worth noting that, from Binance’s perspective alone, the described behavior has already formed a downward liquidity pool, which could become a target for whales.
At the time of writing, cryptocurrency trader and analyst Ali Martinez discovered similar behavior among retail traders on Binance. Martinez stated that 72% of Bitcoin speculators on Binance hold open long positions.
Interestingly, over time, the derivatives market has had an increasing impact on Bitcoin. Finbold reported on June 2nd that BTC’s spot trading and on-chain transaction volume have been declining, and this trend continues. Additionally, Finbold reported on Kaiko’s findings, discussing the gradual decrease in Bitcoin’s weekend trading volume.
Investors, especially leveraged traders, must proceed with caution as analysts expect volatility in this leading cryptocurrency. Mt. Gox’s repayment is set to begin on July 1st, and the German government has been selling millions of dollars worth of BTC, both of which create significant selling pressure that could affect the price.
Disclaimer: The content on this website should not be considered as investment advice. Investments are speculative, and your capital is at risk when investing.