Data from crypto and on-chain exchanges show that professional traders feel less confident about Bitcoin’s upward momentum below the $15,500 level.
Traders are usually skeptical after Bitcoin (BTC) „completes“ a strong performing uptrend, such as the stellar move from $12,000 to $15,950 seen in recent weeks.
The 35% gain in the last 30 days has led some traders to conclude that BTC is stretching too far and needs a downturn. On the other hand, many traders are confident that the current bullish run can continue.
The market displays mixed signals as the price of Bitcoin Cycle oscillates between $15,000 and $16,000, so many traders need to rely on its trend to confirm their investment decisions, and this is a dangerous place to be.
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Crypto Fear and Greed Index (Daily). Source: Digital Assets Data
For example, the Cripto Index of Fear and Greed, which is currently at 90, known as „90, Extreme Greed. Many traders seek to counter the index when it shows extremes, which means that „extreme greed“ is a signal to make a profit or trade sold, as it usually „means the market is in for a correction“ according to a web page.
Adding to this, the encryption and on-chain exchange outflow data led analyst Willy Woo to conclude that „an explosion is unlikely to happen“ To resolve this data dispute, an investor could take a closer look at the exchanges of major clients (or major traders) in the long and short position ratio.
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BTC Binance’s main traders bought/sold ratio.
Notice how the main Binance traders have reacted after the Bitcoin moves. The chart suggests that traders are responding to the price rather than trying to predict what will happen. One should expect this movement from newer traders who buy the local tops and sell the dives.
It is important to note that each exchange treats the main traders‘ data differently as there are several ways to measure net customer exposure using derivatives. Therefore, any comparison between different exchanges should be done in percentage changes instead of absolute numbers.
Interestingly, OKEx data show a different approach by the main traders, with Bitcoin rising above US$ 15,800. Instead of blindly following price movements, these traders seem to be waiting up to two days before changing their strategy.
Buy/sell positions from the main OKEx BTC traders.
Although, this strategy seems smarter at first glance, adding long positions since Bitcoin failed to sustain the $15,600 level. There seems to be less despair compared to the reactive behavior of the Binance operators. Nevertheless, there are still no signs of confidence in OKEx’s long-short positioning.
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Regardless of the success rate of these strategies, the ratio of long to short on both exchanges shows that traders do not feel very confident about the current Bitcoin price action. Although both appear to be currently in a slightly long position, their posture changes as market sentiment moves.
When facing mixed signals, traders should avoid trying to find more evidence to support their opinions. Doing nothing at times is the best decision, especially when even professionals seem to be changing their positions after small trend changes.
On-chain analysis, net flows from exchanges and indicators such as the Fear and Greed Index are useful. However, they should not be excluded from analysis by providing conflicting messages.
The views and opinions expressed here are those of the author alone and do not necessarily reflect the views of the Cointelegraph. Every investment and trading movement involves risk. You should conduct your own research when making a decision.