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In the past 48 hours, the price of Bitcoin (BTC) has fallen by $13,360 and more than $2.6 billion worth of futures contracts have been liquidated. Including Altcoin, total liquidations were $5.9 billion.

After the open interest on the 21st. February had reached a record high of $19.5 billion, the ratio stabilized at $16.5 billion. This means that half of the deleted leverage positions have been reopened.

According to long and short traders, as well as various funding level indicators, retailers were hit the hardest.

Large market participants bought the backward

The best trader long and short position indicator is calculated based on consolidated client positions, including spot, margin, perpetual and forward contracts. Unlike premium distortion indicators or options on futures contracts, this indicator gives a broader picture of the net effective position of professional market participants.

Ratio of best long and short positions. Source : Bybt.com.

Despite the differences between cryptocurrency methods, the analysis of the evolution over time provides valuable information.

Huobi’s top traders maintained the ratio of long to short positions at 0.81 on Feb. 20, favoring short positions by 19%. Adding up the net long positions over the next 48 hours, the indicator peaks at 0.95, indicating predominant activity on the buy side.

OKEx’s key traders have been aggressive net buyers over the past three days. Starting from a value of 0.86, which implied a preference for short positions of 14%, they managed to reduce it to a net buying position of 69%.

Eventually the highs in the financial markets began to trade at 1.36, which promoted net long positions, but these were either liquidated or net short to the current level of 1.23. In any case, these market participants have not added positions in the last three days.

Overall, the average long and short position of top traders rose from 1.01 (flat) on Jan. 20 to currently 1.37, which plays in favor of net long positions. Understandably, then, the arbitration tables and whales grew longer and longer as the liquidation progressed.

The decline in refinancing rates shows that retail investors have reduced their long positions

If the big dealers are net buyers, the retailers should hold the other end, even if it is the result of a long leveraged liquidation.

To balance the risk, futures exchanges calculate long (with buyers) or short (with sellers) futures positions every eight hours. This indicator, also known as the refinancing rate, becomes positive when more debt capital is required for longer maturities.

On the other hand, periods of anxiety and high trading activity lead to a negative development in the funding ratio. This time short films will pay.

BTC permanent funding rate. Source : NYDIG

Since the sixth. In February, average weekly production was over 2.3%. This happened at a time when Bitcoin broke through the $38,000 mark, indicating inflated retail sales. On the other hand, large operators generally prefer forward contracts with a fixed calendar to avoid exorbitant financing costs during an upturn.

This movement died out completely on the 23rd. February when the price of Bitcoin dropped below $50,000. After a brief flirtation with a negative refinancing rate, it has now stabilised at around 0.5% per week. Metric indicators indicate that retailers are in liquidation, returning the indicator to a neutral level.

Although $50,000 seems to be a psychologically important level, Bitcoin’s 67% rise so far will likely continue to attract investors. The modest 3% return of the S&P 500 and the 0.6% return on 5-year U.S. Treasury bonds are out of proportion to the potential growth that cryptocurrency can offer.

The views and opinions expressed herein are those of the author only and do not necessarily reflect the views of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research when you make your decision.

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