Bitcoin Price Continues to Fall, But How Are Pro-BTC Traders Standing?

Bitcoin (B T c) has experienced a remarkable 15.7% price increase in the first six days of December. The surge has been fueled largely by anticipation of the imminent approval of spot exchange-traded funds (ETFs) in the United States. Senior Bloomberg ETF analysts have expressed 90% chance of approval by the US Securities and Exchange Commission, which is expected before January 10.

However, Bitcoin’s recent price surge may not be as straightforward as it seems. Analysts have failed to consider several rejections at $37,500 and $38,500 during the second half of November. These rejections have caused professional traders, including market makers, to question market strength, especially from the perspective of derivatives metrics.

Bitcoin’s inherent volatility explains the low appetite of pro traders

Bitcoin’s 7.6% rally to $37,965 on November 15 resulted in disappointment as the movement completely reversed the next day. Similarly, between November 20 and November 21, the price of Bitcoin declined by 5.3% after the $37,500 resistance proved stronger than anticipated.

Although corrections are natural even during bullish markets, they explain why whales and market makers are avoiding leveraged long positions in these volatile conditions. Surprisingly, despite positive daily candles during this period, buyers using long leverage liquidated out in force, with losses totaling $390 million over the past five days.

Although Bitcoin futures premium on the Chicago Mercantile Exchange (CME) Reached its highest level in two yearsWhile indicating high demand for long positions, this trend does not necessarily apply to all exchanges and client profiles. In some cases, top traders have reduced their long-to-short leverage ratios to the lowest levels seen in 30 days. This indicates a profit-taking trend and low demand for bullish bets above $40,000.

By consolidating positions in perpetual and quarterly futures contracts, one can get a clear idea of ​​whether professional traders are leaning towards a bullish or bearish stance.

Starting December 1, OKEx’s top traders favored long positions with a strong 3.8 ratio. However, as soon as the price rose above $40,000, those long positions were closed out. Currently, the ratio heavily favors shorts at 38%, which is the lowest level in 30 days. This change suggests that some important players have retreated from the current rally.

However, the entire market does not share this sentiment. Top traders on Binance have shown an opposing movement. On December 1, their ratio favored longs at 16%, which has since increased to a bullish position of 29%. Still, the absence of leveraged longs among top traders is a positive sign, confirming that the rally has been driven primarily by spot market accumulation.

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Options data confirms some whales aren’t buying the rally

To determine whether traders were alerted and currently hold short positions underwater, analysts should examine the balance between call (buy) and put (sell) options. Increasing demand for put options usually prompts traders to focus on neutral-to-bearish pricing strategies.

Bitcoin options data on OKEx shows increased demand for puts relative to calls. This suggests that these whales and market makers may not have expected the price to rise. Still, traders were not betting on a decline in price as indicators favored call options in terms of volume. Additional demand for put (sell) options would have driven the metric above 1.0.

Bitcoin’s rally towards $44,000 appears to be healthy, as no excessive leverage has been deployed. However, some key players were surprised, reducing their leverage periods as well as showing increased demand for put options.

As the Bitcoin price remains above $42,000 in anticipation of potential spot ETF approval in early January, bulls have a stronger incentive to put pressure on whales that have decided not to participate in the recent rally.