Bitcoin falls to $39,000, but traders using the leverage are hoping for $50,000

On April 11, Bitcoin (BTC) fell to $40,500, a critical level that erased the gains from the prior three weeks’ heights of $48,200 on March 28. The US Federal Reserve’s balance sheet cuts are putting pressure on equities and risk assets, according to experts, with Bitcoin being particularly susceptible.

The Co-Founder of Decentrader, filbfilb, agreed with these strong headwinds by stating that the Fed’s decision would influence the BTC price trend “for months to come.”

The U.S. dollar’s rebound against the Chinese yuan sparked a sell-off in cryptocurrencies, with bitcoin falling by more than 7% and ether losing 8%. The DXY index rose above 100 for the first time since May 2020, negatively impacting Bitcoin.

According to the data, margin traders are bullish –

Margin trading is a technique where investors can borrow cryptocurrency in order to leverage their trading position and enhance returns. Traders may use Tether (USDT) to open a leveraged long trade, but Bitcoin borrowers can only short the currency because they are betting on its price dropping. The balance between margin longs and shorts isn’t always balanced, unlike with futures contracts.

OKEx USDT/BTC margin lending ratio. Source: OKEx

Traders have been borrowing more USDT lately, as demonstrated by the ratio climbing from 9.6 on April 8 to 15.9 today, which is the highest level in two months.

Despite the fact that the margin lending ratio hit 5 on March 28, stablecoin borrowing was favored. Traders are typically bullish, therefore a margin lending ratio of less than 3 is considered bad. As a result, the current level is still positive, albeit somewhat less so than before.

The long-to-short ratio is moderately bearish –

The net ratio of the top traders is based on externalities that may have impacted the longer-term futures contracts. By examining these positions across spot, perpetual and futures contracts, one can determine whether expert traders are betting on a rise or decline.

There are differences in methodology among various trading platforms, thus viewers should focus on changes rather than absolute figures.

Exchanges’ top traders Bitcoin long-to-short ratio. Source: Coinglass

Professional traders have decreased their long (bull) bets somewhat since March 31, when OKX’s Bitcoin long-to-short ratio rose briefly before dropping. This movement is in direct contrast to the previous margin trading markets, which showed a significant mood improvement during the first week of April.

So, what could be the reason for the distortion? The most likely cause is that Bitcoin’s price has dropped 32% in a year. Even as BTC approached $48,000 on March 29, futures traders were hesitant to build bullish positions with leverage.

It is feasible to interpret the same data “glass half full” since Bitcoin’s price has dropped 15% since March 29, despite the fact that there is no indication of bearishness in the margin or BTC futures market. Traders are playing it safe in derivatives, but they remain optimistic about $50,000 and higher in the near term.

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