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Futures Friday is a weekly review of quarterly Bitcoin futures on OKEx.
The tumultuous U.S. election was undoubtedly the biggest event to affect markets this week. Most of the toss-up states were headed to Trump at the beginning of the election night, but after the mail-in ballots have started being counted, Biden took back the lead in a number of battleground states. Markets reacted quickly to this flip, as Bitcoin bottomed out along with the stock market after the election polls reversed in Wisconsin on Wednesday morning.
As the election results increasingly favor a Biden victory, both equities and cryptocurrencies continue their bullish run. Bitcoin achieved a 10% surge on Thursday and reached a three-year high of $15,968 this morning, as per the OKEx BTC Index price. Right now, the OKEx Quarterly Futures ( BTCUSD1225) is trading at a premium of $300, or 2%, over the index price.
In last week’s Futures Friday article, we noted how OKEx trading data reflected the market’s confidence in mid- to long-term prices. This week’s rapid uptick in the long/short ratio indicates that retail investors were chasing the price rally. Meanwhile, trading volumes amplified from Wednesday and were accompanied by an increase in BTC basis.
These technicals indicate that market sentiment favors short-term price appreciation. However, profit-taking in the spot leveraged market is likely to put downward pressure on the price.
On the four-hour chart, moving averages 30 and 60 show a clear bullish alignment — and, overall, this sentiment is being reinforced and is likely to continue into the near future.
OKEx trading data readings
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BTC long/short ratio
The long/short ratio was largely flat before Thursday, hovering in the 0.7 to 0.8 range. The sharp rise came after the price of the quarterly futures broke above $15,000 on Thursday morning, with the ratio jumping from 0.8 to 0.95. This is also the highest point reached by this indicator since mid-October. This surge in the long/short ratio indicates that retail investors were chasing the price rally.
In addition, since the funding rates on BTC perpetual swap are still not overheated, we can expect the current bullish sentiment to persist in the short-term.
The long/short ratio compares the total number of users opening long positions versus those opening short positions. The ratio is compiled from all futures and perpetual swaps, and the long/short side of a user is determined by their net position in BTC. In the derivatives market, whenever a long position is opened, it is balanced by a short position. The total number of long positions must be equal to the total number of short positions. When the ratio is low, it indicates that more people are holding shorts.
BTC basis
The basis between quarterly futures and spot is now up to $300, or around 2% — up from $180 on Wednesday morning. However, this premium is not that high compared to the $350, or 2.7%, on the last Sunday of October, when the price broke through $13,000.
Relatively, the current premium is at healthy levels and shows market confidence. But in the next week, market participants need to keep an eye out for a potentially overheated basis, signaling an upcoming correction.
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Bitcoin futures reflect optimism ahead of election results despite mild profit-taking was originally published in OKEx Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
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