The cryptocurrency market is known for its unpredictable nature, and the upcoming September seasonality concerns are no exception. Historically, bitcoin’s (BTC) price has dropped by an average of 4% in September since 2009, according to data from Bitcoinmonthlyreturn.com. In six out of the past seven years, September has seen bears lead the action, leaving some observers feeling defensive about the immediate price prospects for the largest cryptocurrency.
But What’s Happening on Bitfinex?
However, a closer look at the activity on the crypto exchange Bitfinex, which is known to host whales (holders of large amounts of crypto), reveals that traders are setting up bullish bets. Since August 28th, the number of margin longs on Bitfinex has increased by a net 3,000 BTC to nearly 64,350 BTC, according to data from Greeks.Live and Coinglass.
What Do Margin Longs Mean?
Margin longs involve using borrowed funds to purchase BTC in the spot market. In essence, traders are borrowing money to buy more BTC, betting that this year, the cryptocurrency will defy its bearish September seasonality.
Interest Rates Surge to Over 20%
The annualized interest rate charged on borrowed funds has surged to over 20% in the past 10 hours. This indicates that traders are willing to pay a premium to borrow money and buy more BTC, further emphasizing their bullish sentiments.
What’s Behind the Bullish Sentiments?
According to Greeks.Live, a crypto block trading service provider, "green lending rates and long positions have always been an over-the-top indicator for bulls; the previous two major spikes were preceded by significant rises in rates and long positions."
Green lending rates refer to interest rates that are above zero. This is an important metric as it indicates that traders are willing to pay more to borrow money, which can lead to increased buying pressure on the market.
Perpetual Funding Rates Flip Positive
Activity in bitcoin perpetual futures listed worldwide is also showing a renewed bullish bias. The open interest-weighted global average funding rates have shifted positively, indicating that perpetual futures are trading at a premium to the spot price. This suggests that the dominance of bullish bets is increasing.
Over-the-Counter (OTC) Desks Witness Renewed Demand
Meanwhile, over-the-counter (OTC) desks are witnessing renewed demand for bitcoin call options offering asymmetric payoffs during price uptrends. According to Greeks.Live, "options market has started to see a large number of block calls, accounting for 30% of the day’s total and the whales are laying out long positions across the board."
Call Spread Strategies on OTC Network Paradigm
Elsewhere, call spread strategies were recorded on the OTC network Paradigm on Monday. The notable transactions included:
- 80K/100K Dec Call Spread: This strategy involves buying a call option with a strike price of 80,000 and selling a call option with a strike price of 100,000.
- ETH 27 Dec/28 Mar Calendar Spread: This strategy involves buying a call option for Ethereum (ETH) expiring in December and selling a call option for ETH expiring in March.
These transactions indicate that traders are positioning themselves for potential price increases in the coming months.
Conclusion
The activity on Bitfinex, along with the positive shift in perpetual funding rates and OTC demand for bullish options, suggests that traders are setting up bullish bets amidst bearish seasonality concerns. While historical trends may indicate a potential price drop in September, the current market activity indicates that traders are willing to take on risk and bet on a bullish outcome. Only time will tell if this strategy pays off, but one thing is certain: the cryptocurrency market is full of surprises.
References
- Bitcoinmonthlyreturn.com
- Greeks.Live
- Coinglass
- Paradigm
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