Bitcoin Traders Expect New Annual Lows After BTC’s $25K Rejection – Data Disagrees

Bitcoin (BTC) showed weakness on August 15, with a 5% loss after testing the $25,000 resistance. The move liquidated over $150 million worth of leveraged long positions and has some traders predicting a move back towards annual lows the $18,000 level.

The price action coincided with worsening conditions for technology stocks, including Chinese giant Tencent, which is expected to report its first ever quarterly revenue decline. According to analysts, the Chinese gaming and social media conglomerate is expected to post quarterly earnings of around $19.5 billion, down 4% from a year earlier.

In addition, Citi investment bank on August 16 cut Zoom Video Communications (ZM) recommendation to sell, adding that the stock is “high risk”. Analysts explained that a challenging post-COVID dynamic, plus additional competition from Microsoft Teams, potentially caused a 20% drop in ZM shares.

The general bearish sentiment continues to plague crypto investors, a move described by influencer and trader @ChrisBTCbull, who mentioned that a simple rejection at $25,000 led traders to post targets below $17,000.

Margin traders remain positive despite the $25,000 rejection

Monitoring margin and options markets provides excellent insight into understanding how professional traders are positioned. For example, a negative reading would occur if whales and market makers reduced their exposure when BTC approached the $25,000 resistance.

Margin trading allows investors to borrow cryptocurrency to leverage their trading position and increase returns. For example, one can increase exposure by borrowing stablecoins to buy an additional Bitcoin position.

On the other hand, Bitcoin borrowers can only short the cryptocurrency when they are betting that the price will go down. Unlike futures contracts, the balance between margin longs and shorts is not always matched.

OKX USDT/BTC margin lending ratio. Source: OKX

The chart above shows that OKX traders’ margin-lending ratio has remained relatively stable near 14 while the Bitcoin price jumped 6.3% in two days, only to be rejected after hitting the $25,200 resistance.

Furthermore, the metric remains bullish by favoring stablecoin loans with a wide margin. As a result, pro-traders have held their bullish positions and no further bearish margin trades emerged as Bitcoin retreated 5.5% on August 16.

Related: Bitcoin miners get 27% less BTC after 3 months of major sales

Options markets have a neutral stance

There is uncertainty as to whether Bitcoin will make another run against the $25,000 resistance, but 25% delta bias is a clear sign when arbitrage tables and market makers are overcharging for upside or downside protection.

The indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put option premium is higher than risky call options.

The bias indicator will move above 10% if traders fear a Bitcoin price crash. On the other hand, generalized voltage reflects a negative bias of 10%.

Bitcoin 30-day options show 25% delta bias: Source: Laevitas.ch

As shown above, the 25% delta bias has barely moved since August 11th, hovering between 5% and 7% most of the time. This selection is considered neutral because options traders price a similar risk of unexpected pumps or dumps.

If pro-traders went into a “fear” mood, this metric would have moved above 10%, reflecting a lack of interest in offering downside protection.

Despite the neutral Bitcoin options indicator, the OKX margin lending rate showed that whales and market makers are maintaining their bullish bets following a 5.5% BTC price decline on August 16. For this reason, investors should expect a retest of the $25,000 resistance as soon as global macroeconomic conditions improve.

The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trade involves risk. You should do your own research when making a decision.