Binance Leveraged Traders are Fearful Whilst Institutions are Optimistic

GB Market Commentary 02/03/2022

by Marcus Sotiriou

Bitcoin consolidates above $43,000, as it is shown signs of a decoupling against the US stock market over the past few days. Despite this, Bitcoin still has not made a higher high on the daily time frame, as yesterday’s daily candle closed below $44,600 at around $44,300 – a daily close above $44,600 would signal the start of a sustained uptrend.

BTC Futures Annualised Rolling 3mth Basis - 02/03/22

One sign suggesting that we have reached a bottom, is the fact that the 24-hour average basis [spread between futures and spot prices] have reached a new all-time low 1.17%, below the bottom 1.18% seen on July 21, 2021. This indicates that leveraged traders are very pessimistic and fearful, which typically signals the end of bear markets and a great buying opportunity.

In addition, we are seeing the opposite sentiment on Chicago Mercentile Exchange (CME), which represents institutions and whales (large traders). Data from Skew Show shows that the preimum for CME has stabilised between 2% to 3%, after hitting under 1% in January, which indicates that these large players are very optimistic.

For the first time since March 2020, the CME futures traded at a higher premium than those listed on Binance. This is partly down to the launch of ProShares Bito ETF on CME last November. In confluence with on-chain metrics, the CME and Binance premia suggests that large players are accumulating whilst retail traders capitulating.

ProShares BITO EFT: AUM (BTC adjusted) - 02/03/22