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.