Bitcoin Bulls Are Confident Even As A Key Btc Price Metric Hits A New Low in May

Lending or margining money is an option in the crypto world. What does this mean? Let us explain you all in a simple way. If you want to increase the capital amount that you want to invest in BTC, you can leverage USDT and put it on BTC. This will increase the capital amount and on other hand increase the profit gain. But is that it, what about the interest that will put on the leverage amount? It will be compensated from the BTC’s price appreciation and compensate itself. 

 This might be a new concept for traders who entered the crypto world recently, but for the old traders and the ones who are willing to take the risk even in the volatile situation, this is an opportunity to grow the percentage of their profits. They observe the leverages and margins that are been taken up in the market of BTC and tether to predict if the market is going to go bearish or bullish. But in spite of this theory, BTC reached its All-time high even though the BTC/USDT borrow metrics showed that it reached the lowest since November 20, 2020. At the current moment, even though this figure favors all the bulls of the market, it is to think for the next move of catalysts who worked upon the current situation.

The theory was simple, whenever bitcoin revolution app traders and people in the market borrow USDT or any other stable coin they use it to trade other costly cryptocurrencies for the long run. But, if they borrow BTC in the same pair, it is mainly for short positioning and exiting. Theoretical meaning is whenever USDT/BTC leverage or lending ratio goes up, the market price of BTC is likely to touch new heights and the same goes vice versa with the falling. But the current data is quite opposite to the prediction were looking at the OKEx charts they have been holding eight times larger USDT loans than BTC-denomination loans. Albeit explains while been on the bullish side that this is near the lowest level since November 17, 2020. 

If we look at the current charts, the analytics is favored more towards the bulls. But why is there a great drop in the price of $60k (stable) to $50k (current price)? Around this time, there was a massive spike in lending of USDT rate in the mid of March as BTC surpassed the $60k milestone. The leverages were long and reverted a conversion rate of almost 13% decrease over the following days. This made people stop utilizing the leverages on stable coins to look at a decrease or a dip in the market overall.

A small 1% fee on the leverages that the traders take was not enough to stop them from longing on BTC. The point is that this fact may remain a positive indicator until the demand for BTC or any other stable coins once again emerges in the market. Which may increase the annualized fees by a few more percent and affect the leverage cycle of traders.

Bitcoin Bulls Are Confident Even As A Key Btc Price Metric Hits A New Low

The long-to-short ratio of bitcoins has been dropped in the last five months. However, this is not considered as bait anymore. The bitcoin holders still have confidence that the price of these coins would hit high in the coming months. The bulls are still under the control of bitcoin pricing. The margin trading will enable the investors to take money or cryptocurrency to improve their trading position and boost its size to get huge returns. For instance, when you borrow Tether (USDT) you can also borrow bitcoin, which would increase the exposure of cryptocurrencies. There will be an interest rate you must pay for borrowing the cryptocurrency, but this price must be appreciated so that the losses can be compensated.

The new traders who are trading in the crypto market are not aware of this, but the investors who are borrowing BTC would bet on price downside. This is the main reason for analysts to have a close watch on the amount that is lent for bitcoins and tether. The insights that are gained will let people know whether the investment is bearish or bullish. From the gathered data, it is observed that the price of bitcoins would be high all time, but the BTC/USDT ratio has hit the lowest ratio in November 2020. Though the figures from the data still have bulls, there are many questions that are coming up regarding the catalysts that are behind this major move. If the traders are taking USDT or stable coins, these are being used as a long term cryptocurrency. On the flip side, bitcoin borrowing is happening for short positions. When the USDT/BTC ratio of borrowing is going up, the market would be angled in the bullish way. The movements that are happening opposite would demand for the bitcoin shorts.

USDT loans are eight times larger when compared to the bitcoin denominated loans. There are margin trades happening regularly in the spot markets. The trader can start to do margin trading by moving the collateral funds to their margin account. The exchanges would have 3 to 10 times of leverage based on the volatility and conditions of the market.

The BTC has hit the new high of USD 61,800 with the sustainable candle of USD 55,000 in the last 17 years. Increasing the borrowing rate of bitcoin would result in shortage of bitcoin leverage. As per the data that is given by Bitfinex, the bitcoins lending rate has increased by 1% every year. The higher costs are not due to the reduction of the borrowing rate of bitcoins. The traders who are betting on a negative price would need to borrow bitcoins to carry out trading in a short position. They have to pay the interest for the borrowed bitcoins and trade with the US dollars and stable coins. The transaction can be closed by buying the bitcoin at a low price and return to the lender by taking additional interest. There is an increase in the lending rate of bitcoins in the US and it crossed USD 60,000. The BTC dropped to 13%, which resulted in the fiat and stable coin borrowing rate to regularize. The traders who are borrowing the cryptocurrencies are paying around 15 to 23%. The annual fee of just 1% is not enough to lure the borrowers. Though the margin rate of 23% is considered to be expensive, there is always a room for leverage.