$43K BTC flipping support? Not anytime soon, according to derivative metrics

Bitcoin (BTC), which posted a 5% gain on March 22 and tested the $43,000 resistance, showed its strength. This move wiped out more than $150 million in leverage short positions. These were those who bet on a falling price by using futures contracts.

Twitter analysts believe that the price increase is due to Do Kwon (co-founder of the blockchain protocol Terra). Kwon spoke out about his plans to support the TerraUSD stablecoin using Bitcoin during a Twitter Spaces conversation with Udi Wertheimer.

Terra’s cofounder stated that “the current clip we have to purchase Bitcoin is approximately $3 billion” which caused markets to become agitated when observers attributed $125 million USDT transaction to Kwon.

Margin traders still go long

Margin trading allows investors borrow cryptocurrency to increase their trading position and increases returns. One can borrow Tether to buy cryptocurrency and increase their exposure.

However, Bitcoin borrowers cannot short the cryptocurrency if they bet on the price falling. Contrary to futures contracts, the balance of margin longs and shorters is not always equal.

OKEx USDT/BTC margin lending ratio. Source: OKEx

This chart shows that traders are borrowing more BTC lately, with the ratio decreasing from 15 to 7.5 on March 20 and rising to 7.5 now. Despite the fact that the indicator favors stablecoin borrowing the data is still bullish. However, it has fallen to its lowest level since March 9. A margin lending ratio lower than 3 is considered unfavorable, as crypto traders tend to be bullish. The current level is positive, but less confident than it was two days ago.

Recent shifts in option markets have not occurred

It’s difficult at the moment to see a market direction. The 25% delta skew, which is indicative of arbitrage desks or market makers charging too much for downside or upside protection, is still a warning sign. The 25% delta skew is a comparison of similar call (buy) or put (sell) options. This metric will be positive if fear is present, as the protective put options premium for similar risk options is higher than other options.

If traders are worried about a Bitcoin price crash, the skew indicator will rise above 8%. Generalized excitement, however, reflects a negative 8 percent skew.

Bitcoin 30-day options show 25% delta-skew: Source: Laevitas.ch

As shown above, we have moved from the 8% “fear” zone to a neutral zone since March 9. However, Tuesday’s rally of 5% was not enough for us to shift our options to neutral-to-bullish.

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These arbitrage desks will have to reverse bearish positions if the price breaks $45,000 or changes the trend.

OKX margin lending rates showed that pro traders had reduced their bullish bets following a 13% BTC price rise in 10 days. So derivatives data offers a slightly bearish perspective. It seems that expecting a pump over $43,000 at this time is a little too optimistic.

Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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