Bitcoin’s Resilience Amid Seasonal Trends
Activity on a prominent crypto exchange, known for its substantial whale activity—holders of large amounts of cryptocurrency—has shown a surprising resilience against the traditionally bearish trends observed in Bitcoin’s price during September. Historically, Bitcoin has experienced an average decline of 4% in September since its inception in 2009, according to data from Bitcoinmonthlyreturn.com. In fact, over the past seven years, September has predominantly seen bearish sentiment, leading many traders and investors to adopt a cautious stance regarding the immediate prospects for Bitcoin, the leading cryptocurrency by market capitalization.
However, recent developments on the Bitfinex crypto exchange, known for its significant influence on market trends, indicate that a bullish sentiment may be taking hold. Since August 28, the number of margin long positions on Bitfinex—where traders use borrowed funds to purchase Bitcoin in the spot market—has surged by a net total of 3,000 BTC, bringing the total to nearly 64,350 BTC, as per data from sources such as Greeks.Live and Coinglass.
Furthermore, the annualized interest rate for borrowed funds has spiked to over 20% within just a few hours. This uptick suggests that traders are increasingly willing to borrow money to acquire more Bitcoin, banking on the possibility that this year, the cryptocurrency will break free from its historical bearish September trend.
Market Indicators and Whale Activity
The increase in margin long positions and the rise in borrowing rates serve as indicators of bullish sentiment among traders. As the crypto block trading service provider, Greeks.Live, explained in a Telegram chat, elevated lending rates and long positions have historically been reliable indicators for bullish market conditions. Notably, the previous two significant spikes in Bitcoin’s price were preceded by similar surges in these metrics.
In addition to the activity on Bitfinex, the bitcoin perpetual futures market worldwide is reflecting a renewed bullish bias. This is evidenced by the positive shift in open interest-weighted global average funding rates. Positive funding rates imply that perpetual futures are trading at a premium compared to the spot price, which suggests that bullish bets are becoming more dominant in the market.
Growing Demand for Bitcoin Options
Another critical aspect of the current market dynamics is the increased demand for Bitcoin call options, particularly on over-the-counter (OTC) desks. These options provide asymmetric payoffs during price uptrends, making them attractive to traders anticipating a bullish movement. According to Greeks.Live, the options market has begun to see a significant influx of block calls, which accounted for 30% of the total trades for the day. This increase highlights that whales are strategically laying out long positions across various instruments, indicating a strong belief in potential price appreciation.
Additionally, notable call spread strategies were recorded on the OTC network Paradigm recently. Traders focused on out-of-the-money (OTM) options, with specific strategies including an 80K/100K December call spread and an ETH 27 December/28 March calendar spread. Such strategies suggest that market participants are actively positioning themselves for future price movements, further cementing the bullish outlook.
Conclusion
In summary, while the historical trends for Bitcoin in September have typically leaned bearish, current market activities are presenting a counter-narrative. The increasing margin longs on Bitfinex, along with rising borrowing rates, positive funding rates in futures markets, and heightened demand for call options indicate that traders are preparing for potential price increases. As the market continues to evolve, it will be crucial for participants to monitor these indicators closely to navigate the complexities of the cryptocurrency landscape effectively.
