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Data shows that traders are neither optimistic nor bearish about the price of Bitcoin below $ 15,500

November 10, 2020

As usual, Traders become skeptical after Bitcoin (BTC) “completed” a solid performance as the outstanding development from USD 12,000 to USD 15,950 was observed in the past few weeks.

The 35% increase in the past 30 days led some traders to conclude that BTC is too prevalent and needs a pull back. On the flip side, there are many traders who are confident that the current bull run can continue.

In general, the market is showing mixed signals as the price of Bitcoin fluctuates between $ 15,000 and $ 16,000. As a result, many traders have to rely on their prejudices to confirm their investment decisions and this is a dangerous place.

Cryptocurrency index for fear and greed (daily). Source: Digital asset data
Data shows that traders are neither optimistic nor bearish about the price of Bitcoin below $ 15,500
Data shows that traders are neither optimistic nor bearish about the price of Bitcoin below $ 15,500

Take the Fear and Greed Index, for example, which currently shows 90, a mirror image of “90, Extreme Greed”. Many traders counter the index when it is in polar extremes, meaning that “extreme greed” is a profit-taking signal or a short strategy as it generally means “the market needs to correct”.according to the website.

Contributed, The exchange of cryptocurrencies and outflow data in the chain have led analyst Willy Woo to conclude that “an explosion is unlikely”.. To resolve this data dispute, an investor could examine the exchange of large accounts (or wholesalers) on the relationship between long and short.

Long-to-short relationship of Binance’s best BTC traders. Source: Binance

Check out how the top Binance traders reacted after the Bitcoin moves. The graph shows that traders react to price rather than predict it. One should expect this move from more beginners buying local tips and selling dips.

It’s worth noting that every trade treats data from top traders differently, as there are several ways to measure net customer risk using derivatives.. Therefore, a comparison between different providers should be based on percentage changes rather than absolute numbers.

Interestingly, OKEx data shows a different approach by the big traders as Bitcoin surged above $ 15,800. Instead of blindly following price movements, these investors appear to wait up to two days before changing their strategy.

Long to short relationship with the most important OKEx BTC dealers. Source: OKEx

Although this strategy seems wiser at first glance, Adding long positions while Bitcoin failed to hold the $ 15,600 level. Compared to the reactive behavior of Binance traders, there seems to be less desperation. Even so, there is no sign of confidence in OKEx’s long-short positioning.

Sometimes the best trade is not to trade at all.

Regardless of the success rate of these strategies, the relationship between long and short positions on both exchanges shows that traders are not particularly confident about the current Bitcoin price action.. While both appear to be in a slightly long position right now, their stance changes as market sentiment moves.

With mixed signals, traders should avoid finding more evidence to back up their views. Sometimes, Doing nothing is the best decision, especially when even professional traders seem to change their position after small trend changes.

On-chain analysis, AC net flows, and indicators like the fear and greed index are helpful. However, they should not be excluded from analysis when delivering mixed messages.

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