Bitcoin price rallies to $19K, but analyst says a $17.3K retest could happen next

Bitcoin (BTC) terms has gained 15% successful the past 13 days, and during this timeframe, traders’ bearish bets successful BTC futures were liquidated successful excess of $530 cardinal compared to bulls.

After rallying to $19,000 connected Jan. 12, Bitcoin reached its highest terms since the FTX speech illness connected Nov. 8. The determination was mostly fueled by the United States Consumer Price Index (CPI) anticipation for December, which matched statement astatine 6.5% year-over-year — highlighting that the inflationary unit apt peaked astatine 9% successful June.

Furthermore, connected Jan. 11, FTX lawyer Andy Dietderich said $5 cardinal successful cash and liquid cryptocurrencies had been recovered — fueling hopes of partial instrumentality of lawsuit funds successful the future. Speaking to a U.S. bankruptcy justice successful Delaware connected Jan. 11, Dietderich stated that the institution plans to merchantability $4.6 cardinal of non-strategic investments.

Let’s look astatine derivatives metrics to recognize whether nonrecreational traders are excited astir Bitcoin’s rally to $19,000.

Margin usage accrued arsenic Bitcoin terms rallied to $18,300 and above

Margin markets supply penetration into however nonrecreational traders are positioned, and borderline is beneficial to immoderate investors due to the fact that it allows them to get cryptocurrency to leverage their positions.

For instance, 1 tin summation vulnerability by borrowing stablecoins to bargain Bitcoin. On the different hand, Bitcoin borrowers tin lone abbreviated the cryptocurrency arsenic they stake connected its terms declining. Unlike futures contracts, the equilibrium betwixt borderline longs and shorts isn’t ever matched.

OKX stablecoin/BTC borderline lending ratio. Source: OKX

The supra illustration shows that OKX traders’ borderline lending ratio firmly accrued connected Jan. 11, signaling that nonrecreational traders added leverage longs arsenic Bitcoin rallied toward $18,300.

More importantly, the consequent 2% correction connected Jan. 12 that led Bitcoin to a $17,920 debased marked the implicit borderline reversal, meaning whales and marketplace makers reduced their bullish positions utilizing borderline markets.

Presently astatine 21, the metric favors stablecoin borrowing by a wide margin, indicating that bears are not assured astir opening Bitcoin borderline shorts.

Futures traders ignored the Bitcoin terms pump

The long-to-short metric excludes externalities that mightiness person solely impacted the borderline markets. In addition, it gathers information from speech clients’ positions connected the spot, perpetual and quarterly futures contracts, frankincense offering amended accusation connected however nonrecreational traders are positioned.

There are occasional methodological discrepancies betwixt antithetic exchanges, truthful readers should show changes alternatively of implicit figures.

Exchanges' apical traders Bitcoin long-to-short ratio. Source: Coinglass

Even though Bitcoin broke supra the $18,000 resistance, nonrecreational traders person kept their leverage agelong positions unchanged, according to the long-to-short indicator.

For instance, the ratio for Binance traders stood steadfast astatine 1.08 from Jan. 9 until Jan. 12. Meanwhile, apical traders astatine Huobi reduced their leverage longs arsenic the indicator moved from 1.09 to the contiguous 0.91. Lastly, astatine crypto speech OKX, the long-to-short somewhat accrued favoring longs, moving from 0.95 connected Jan. 9 to the existent 0.97.

Traders utilizing futures contracts were not assured capable to adhd leveraged bullish positions contempt the terms increase.

Related: 13% of BTC proviso returns to nett arsenic Bitcoin sees 'massive' accumulation

Bitcoin terms could retest $17,300

While the borderline information shows that sizable leverage was utilized to propulsion Bitcoin supra $18,000, it suggests that the concern was lone temporary. Most likely, those nonrecreational traders deposited much borderline and consequently reduced their leverage aft the event. In essence, the metric looks precise steadfast due to the fact that it indicates that borderline markets are not overbought.

As for the apical trader’s long-to-short, the lack of request for leverage longs utilizing futures contracts is somewhat concerning, but astatine the aforesaid time, it leaves country for further purchasing power.

From a derivatives standpoint, adjacent if Bitcoin retests $17,300, the bulls should not beryllium acrophobic due to the fact that the derivatives indicators amusement small request from abbreviated sellers and nary excessive leverage from buyers.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.

The views, thoughts and opinions expressed present are the authors’ unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.