Bitcoin (BTC) has recently experienced a 5% profit on 22nd March along with a resistance of $43,000. An approximate value of $150 million of short position leverage was liquidated by those people who bet on the decreasing price of BTC with the help of future contracts.
Margin Traders Of BTC Will Still Go Long
According to a few analysts of Twitter, the major improvement has occurred due to Do Kwon, Terra’s co-founder. Recently, in a conversation between Kwon and Udi Wertheimer, an analyst, Kwon stated that he has plans to support stablecoins of TerraUSD with BTC. The co-founder of Terra mentioned that their current plan is to buy BTC for around $3 billion and they will further add to this amount in the future.
This statement agitated the market on 21st March and following this, few observers connected the transaction of $125 million USDT to Kwon. The investors can temporarily acquire cryptocurrency in order to leverage their trading position which in turn increases the exposure that they get and all this is possible because of margin trading. Thus, an individual who is borrowing Tether and buying cryptocurrencies is actually increasing the exposure.
However, the borrowers of BTC are holding the cryptocurrency when they are putting a bet on the decreasing price. The shorts and the margin longs do not have a balance like future contracts. The delta skew of 25% is a sign that shows the time when market makers and arbitrage desks are overcharging for downside and upside protection.
A similar kind of put and call options will be compared by the 25% delta skew. The meter of metric will turn positive when there is fear all over as the option of a protective put is greater than risk call options that are quite similar. Furthermore, the indicator of the skew will increase to 8% when the traders will be afraid of a BTC price crash.
