Crypto Traders Seize Opportunity as Bitcoin Prices Dip
As Bitcoin (BTC) experiences a significant decline, falling to a three-month low, traders are seizing the opportunity to buy on Kraken, one of the largest cryptocurrency exchanges in the world. According to Alexia Theodorou, head of derivatives at Kraken, the recent price drop has attracted the attention of bargain hunters.
Just before publication, BTC had slipped below $88,000, coinciding with Nasdaq futures indicating ongoing risk aversion on Wall Street. The yen, traditionally considered a safe haven during turbulent times, has remained strong against the U.S. dollar and risk-sensitive currencies such as the Australian dollar.
This decline in BTC value follows a notable $1 billion increase in open futures positions on Binance late Monday, suggesting that many traders are taking short positions in anticipation of further price drops.
However, on Kraken, the influx of buyers has resulted in a surge in long positions, pushing the perpetual long-short ratio to a record high of 0.8. This ratio reflects the balance of open buy positions relative to active sell positions at any given moment. Theodorou commented, “Despite Bitcoin’s price falling below $90,000, Kraken has witnessed a remarkable increase in traders opening long positions in its BTC perpetual markets.” She noted that the long-short ratio has climbed to an unprecedented ~0.8, with open interest reaching a four-week peak. This behavior indicates that traders may be anticipating a rebound, effectively “buying the dip.”
While the uptick in dip demand on Kraken is a positive signal for bullish sentiment, it is important to note that the long-short ratio remains below 1, indicating that there are still more short positions than long positions on the exchange. Theodorou elaborated, “Although this record long-short ratio suggests an underlying positive sentiment in the market, liquidations are still at relatively normal levels. This situation implies that there may be excess leverage within the system, which could render the market susceptible to further downside movements, potentially manifesting as a long squeeze in the near future.”
