- Bitcoin margin longs on Bitfinex reached $5.1 billion.
- Low borrowing costs fuel leveraged trades, but Bitcoin’s price remains stable near $96,000.
- Investors remain cautious as macroeconomic factors influence market sentiment.
The total value of Bitfinex Bitcoin leveraged long positions reached $5.1 billion on February 19. This marks the highest level of the market within the past three months. Analysts predict whales have positioned themselves strategically for a near-future price surge. However, Bitcoin has shown consistent price stability at $96,000 since February 5.
Borrowing Costs and Arbitrage Opportunities
Users of the Bitfinex exchange can access low borrowing costs at a rate of 0.44% per year. This encourages leveraged positions despite Bitcoin’s stagnant price movement. In comparison, Bitcoin perpetual futures carry an annualized funding rate of 10%. The disparity creates opportunities for traders who implement arbitrage strategies including the cash and carry trade.
However, some market participants buy Bitcoin directly from spot markets to promptly sell futures contracts which generate fast returns. The approach reduces risk exposure but still exploits existing market inefficiencies. The rise in margin longs suggests traders may be using similar approaches to maximize returns.
Bitcoin Struggles to Hold Bullish Momentum
Bitcoin margin longs have grown to 4,105 Bitcoins in total since January. The Bitcoin price has faced challenges to sustain its price growth. The price rose to $109,354 on January 20 but fell below $100,000 by February 5.
Trading in futures markets presents an uncommitted stance. The two-month futures market premium for Bitcoin reached below 10% on February 3. The lack of robust bullish sentiment that emerges from this data reduces trader enthusiasm.
Macroeconomic Factors and Market Sentiment
Mutual sentiment of investors remains heavily impacted by macroeconomic conditions. The U.S. Federal Reserve revealed its February 19 minutes explaining risks from inflation and economic unstable conditions. Current economic conditions are prompting investors to reorganize their investments.
The S&P 500 index achieved its highest mark and gold rose to $2,930. Traders are currently prioritizing secure financial instruments due to market risk factors. Despite maintaining solid qualities as a hedge asset Bitcoin might face tempered market expansion due to investor hesitance.
