Bitcoin rises to $19K, but the analyst says a retest of $17.3K could happen after that

bitcoin (BTCThe price is up 15% in the past 13 days and during this time frame traders have liquidated bear bets in BTC futures by over $530 million compared to bulls.

After surging to $19,000 on January 12, Bitcoin has reached its highest price since the FTX exchange crash on November 8. This move was largely prompted by the United States Consumer price index forecast for Decemberwhich matches the consensus at 6.5% yoy — highlighting that inflationary pressure likely peaked at 9% in June.

Moreover, on January 11, FTX attorney Andy Dietderich said that $5 billion Cash and liquid cryptocurrency recovered – Fueling hopes for a partial return of clients’ money in the future. Speaking to a US bankruptcy judge in Delaware on January 11, Dietderich stated that the company plans to sell $4.6 billion in non-strategic investments.

Let’s take a look at the derivatives metrics to understand if professional traders are excited about Bitcoin’s rally to $19,000.

Margin utilization increased as bitcoin price climbed to $18,300 and above

Margin markets provide insight into how professional traders position themselves, and margin is beneficial to some investors as it allows them to borrow cryptocurrencies to leverage their positions.

For example, one can increase exposure by borrowing stablecoins to buy Bitcoin. Bitcoin borrowers, on the other hand, can only short the cryptocurrency because they are betting that its price will fall. unlike FuturesThe balance between margin calls and short positions is not always identical.

OKX/BTC stable margin lending ratio. Source: OKX

The chart above shows that the margin lending ratio of OKX traders increased steadily on January 11, indicating that professional traders added leverage as bitcoin climbed towards $18,300.

More importantly, the subsequent 2% correction on January 12 that took Bitcoin to $17,920 was a complete margin reversal, meaning that whales and market makers cut their bullish positions using margin markets.

Currently at 21, the metric favors stablecoin borrowing by a wide margin, indicating that bears are not confident about opening margin shorts in bitcoin.

Futures traders ignored the bitcoin price pump

The long to short scale excludes external factors that may only affect margin markets. In addition, it collects data from clients’ positions traded in spot, perpetual and quarterly futures contracts, thus providing better information on how professional traders position themselves.

There are occasional methodological inconsistencies between different exchanges, so readers should keep an eye on changes rather than absolute numbers.

Major exchange traders is long to short ratio of Bitcoin. Source: Coinglass

Despite Bitcoin breaking above the $18,000 resistance level, professional traders kept their long leveraged positions unchanged, according to the long-to-short indicator.

For example, the Binance Trader Ratio was stable at 1.08 from January 9 through January 12. Meanwhile, Huobi’s large traders lowered their long leverage as the index moved from 1.09 to the current 0.91. Finally, on the OKX cryptocurrency exchange, long to short contracts increased slightly in favor of long positions, moving from 0.95 on January 9 to the current 0.97.

Traders using futures contracts weren’t confident enough to add leveraged bullish positions despite the price hike.

Related: 13% of Bitcoin Supply Returns to Profit as Bitcoin Sees ‘Huge’ Accumulation

Bitcoin price could retest $17,300

While the margin data shows that significant leverage was used to push Bitcoin above $18,000, it indicates that the situation was only temporary. Most likely, these professional traders deposited more margin and thus lowered the leverage after the event. Basically, the metric looks very good because it indicates that margin markets are not overbought.

For the long to short term master trader, the lack of demand for leveraged long contracts using futures contracts is somewhat unsettling, but at the same time, it leaves room for additional buying power.

From a derivatives point of view, even if Bitcoin retests $17,300, the bulls should not worry as derivatives indicators show little demand from short sellers and no excessive leverage from buyers.