Bitcoin [BTC] has experienced tremendous volatility since it crossed the USD 80,000 support level. The king coin has suffered a sharp decline, reaching a low of $72,000, and has since recovered to a local high of $76,873.
At the time of writing, Bitcoin was trading at $76,049, down 2.63% on a daily time frame. Amid extreme volatility, investors have taken aggressive positions in the derivatives market.
Bitcoin Whales Compete for Futures Positions
With Bitcoin remaining firmly below $80,000, the market has experienced a sudden surge in demand for longs and shorts. The battle for the Futures position is raging mainly among major market players.
According to Onchain lensa Whale poured $3 million into USDC and opened a long position in BTC with 20x leverage. Previously, this whale posted a loss of $11 million on its long positions.
Source: Onchainlens
Another Whale deposited $5.2 million USDC and opened a BTC short position with 14x leverage, according to Onchain Lens. Before the current market crashed, this whale had made about $10 million from his short positions.
Interestingly, these two whales are not isolated, as investors on several exchanges have largely moved into the futures market.
According to data from CoinGlass, derivatives volume increased by 50% to $108 billion, while Open Interest fell to $50.9 billion. The increase in volume indicated greater investor participation, either by taking short or long positions.
Source: CoinGlass
In this case, investors on Binance and OKX have mainly held long positions, with an average ratio of 2. However, short positions dominated on all exchanges, with the total ratio remaining below 1 at 0.958.
A ratio below 1 indicates that most Futures participants are bearish and actively positioned for further downside.
Can Futures Demand Boost Struggling BTC?
While Bitcoin has experienced massive panic selling, the demand for futures positions has also put significant buying pressure on the market. As such, nearly $26 million in capital is flowing into the futures market.
Despite this capital flow, the bearish trend has leveled off. Looking at the smoothed indicator of the DMI-ADX, the negative index is above the positive index at 36.
Source: TradingView
As a result, the ADX leveled off at around 36 at the time of writing, indicating a higher likelihood of a bearish continuation bias. As such, sellers are in control, and any upward move is not a trend reversal, but merely a pullback.
Therefore, if the trend continues, Bitcoin could see another drop towards $74,000 before another attempt to move higher. For a reversal, demand must be strong enough to regain the Simple Moving Average at $81,000.
Final thoughts
- Bitcoin [BTC] has extreme volatility and drops to $72,000 before returning to $76,000.
- Bitcoin whales are adopting an aggressive futures market positioning, with short demand dominating the market.