Bitfinex Margin Longs Dropped 18% Despite Bitcoin Price Rising 24% in 30 Days

Bitcoin (BTC) price climbed 23.7% over the past 30 days, yet traders on Bitfinex have cut their leveraged long positions by more than 18,000 BTC during this time.

Key takeaways:

Bitfinex margin longs fell 18%, despite Bitcoin price rising 24% in 30 days.

$6.8 billion in long positions far outweight the current $25 million in shorts.

Bitcoin options positioning and spot BTC inflows point to confidence from institutional investors.

Bitcoin (BTC) price climbed 23.7% over the past 30 days, yet traders on Bitfinex have cut their leveraged long positions by more than 18,000 BTC during this time. This wave of profit-taking in margin markets has led to speculation that professional traders may not be fully confident in the current $104,000 price level.

Bitfinex margin longs dropped from 80,387 BTC to 65,889 BTC between April 16 and May 16. This shift marks a reversal from the strong bullish margin demand seen between mid-February and mid-March, a period when Bitcoin’s price fell from $97,600 to $82,500. The current decrease in margin longs is likely a sign of healthy profit-taking rather than a turn toward bearish momentum.

The reasoning behind this move is not entirely clear, since Bitcoin’s jump above $100,000 occurred on May 8, about three weeks after the margin longs peaked. Still, it would be wrong to suggest that Bitfinex whales have adopted a bearish outlook. Their margin longs now total $6.8 billion, while margin shorts stand at just $25 million, showing a major gap between bullish and bearish positions.

This difference is mainly due to Bitfinex’s low 0.7% annual interest rate for margin trading. By contrast, those using leverage for 90-day Bitcoin futures are paying a 6.3% annualized premium, creating arbitrage opportunities for traders to open Bitcoin longs on margin and simultaneously sell an equivalent position in BTC futures. Margin traders also tend to have longer time frames and higher risk tolerance than average investors, so their position changes are less affected by short-term price moves.

Whales unfazed by $105,000 resistance as BTC ETFs drive optimism

To rule out factors limited to margin markets, it is useful to look at Bitcoin options. If traders expect a correction, demand for put (sell) options rises, pushing the 25% delta skew above 6%. In bullish periods, this metric usually drops below -6%.

The current -6% options delta skew shows confidence in Bitcoin’s price, even though data over the past two weeks has ranged from neutral to slightly bullish. This indicates that whales and market makers are not especially concerned about repeated failures to break above the $105,000 barrier.

Some of the increased optimism, despite lower demand for leveraged bullish positions, comes from the $2.4 billion net inflows into US spot Bitcoin exchange-traded funds (ETFs) between May 1 and 15. Therefore, the drop in Bitcoin margin longs does not necessarily mean institutional traders are becoming bearish, especially when considering the BTC options markets.

Although this data does not yet factor in any changes during the past two weeks, the fact that there are $6.8 billion in leveraged margin longs at Bitfinex alone shows professional traders remain highly optimistic about the price outlook.