Main Points:
- Bitcoin margin traders on Bitfinex are increasing long positions, borrowing funds for bullish bets.
- Perpetual futures funding rates have turned positive, signaling a stronger bullish sentiment.
- OTC trading desks are seeing a rise in demand for high-strike Bitcoin call options.
- Despite historical September downturns, traders are betting on Bitcoin to buck the seasonal trend this year.
Bitcoin traders are showing renewed confidence, as data from Bitfinex reveals a surge in long positions through margin trading. This bullish sentiment comes despite the historically bearish trend for Bitcoin in September, where past data indicated an average decline of 4%. Traders are borrowing funds to buy more Bitcoin, indicating that they believe the cryptocurrency will outperform its usual seasonal weakness this year.
Margin Trading and Long Positions Surge
According to data from Greeks.Live and Coinglass, since August 28, the margin loan balance for Bitcoin on Bitfinex has grown by over 3,000 BTC, reaching nearly 64,350 BTC. This spike in long positions suggests that traders are betting on Bitcoin’s price to rise in the near term. The increase in margin borrowing rates, which surged over 20% within 10 hours, further underscores the growing optimism among traders. Historically, such surges in borrowing and long positions have preceded major price rallies, adding to the bullish outlook.
Positive Perpetual Futures Funding Rates
The funding rates for Bitcoin perpetual futures have turned positive, indicating that long positions are paying a premium to short positions. This shift is a sign of rising demand for bullish bets, as perpetual futures contracts trade at a premium to spot prices. A positive funding rate typically points to stronger upward price momentum, and traders are clearly positioning themselves for such a scenario.
OTC Trading Desk Activity and Call Options Demand
Over-the-counter (OTC) trading desks are also witnessing increased activity, particularly in Bitcoin call options. High-strike call options, offering asymmetric payoffs during price uptrends, have seen growing demand. These options are attracting large investors who are looking to capitalize on potential price increases. Notably, block trades, which are large-volume transactions, have made up 30% of the total daily trading volume, signaling significant interest from institutional players.
Strategic Call Spreads and Bullish Sentiment
A particularly noteworthy trend is the use of call spread strategies by large investors. On September 2, the Paradigm OTC network recorded trades involving call spreads for Bitcoin with strike prices of $80,000 and $100,000, set to expire in December. Additionally, calendar spreads were observed for the December 27 and March 28 expirations. Call spreads allow traders to profit from limited price increases by buying lower strike call options and selling higher strike ones. The fact that investors are employing these strategies suggests confidence in Bitcoin’s potential for gains in the coming months.
A Bullish Outlook in Uncertain Times
While Bitcoin has historically underperformed in September, the current activity on Bitfinex and across OTC trading desks shows a different story. Traders are positioning themselves for a potential upside, defying the usual bearish seasonal trends. With long positions surging, funding rates turning positive, and strong demand for high-strike call options, it appears that the market is betting on a bullish breakout for Bitcoin in the near future.
