Crypto Traders Buy Bitcoin Amid Price Slide

Crypto traders are purchasing Bitcoin (BTC) on Kraken, a leading cryptocurrency exchange, as prices fall to a three-month low, according to Alexia Theodorou, head of derivatives at CoinDesk.

BTC dropped below $88,000 recently, coinciding with Nasdaq futures indicating ongoing risk aversion on Wall Street. The Japanese yen, historically a safe haven during turmoil, remained strong against the U.S. dollar and risk-sensitive currencies like the Australian dollar.

This decline in BTC follows a $1 billion increase in open futures positions on Binance, likely due to traders engaging in short positions in anticipation of a further price drop.

However, some bargain hunters have stepped in on Kraken, increasing the perpetual long-short ratio to a record high of 0.8, which reflects the proportion of buy positions relative to active sell positions.

Theodorou noted, “Despite Bitcoin’s price falling below $90K, Kraken has seen a surge in traders opening long positions on its BTC perpetual markets. The long/short ratio has climbed to a record high of ~0.8, with open interest reaching a four-week high. This indicates traders may be anticipating a rebound and effectively ‘buying the dip.'”

While the rise in demand on Kraken is a positive indicator for bullish sentiment, the long-short ratio remains below 1, showing that shorts still outnumber longs on the exchange.

Theodorou explained, “While this record long-short ratio indicates positive market sentiment, liquidations are still at normal levels, suggesting that excess leverage might persist, making the market susceptible to potential downside moves, possibly resulting in a long squeeze soon.”