Most of the traders in the crypto market are unaware of the fact that investors are perfectly allowed to borrow Bitcoin for a margin trade. This will allow them to gamble on the price going downside. Precisely why there are a few analysts who have been monitoring the lending amounts brought about by Tether and BTC in order to see if the investors are moving towards a bearish or a bullish market.
As far as most reports go, there have been quite a few data that have shown that although the prices of Bitcoin aim for a high price, the borrowing ratio displayed on OKEx has reached the lowest level it has ever touched since the 20th of November.
Whenever investors or traders borrow USDT or any other form of stablecoin, they mostly use it to enhance a cryptocurrency. But, the borrowing of Bitcoin is done for short positions. This theoretically provides that if the lending ratio of USDT/BTC moves upward, the market is geared towards a bullish manner. The movement in the opposite direction is a good indicator of increased demand for BTC shorts.
Borrowing Rates For Bearish Bitcoin Have Never Been This Low
Most of the trades at the margin are held at places that are present in an everyday spot market. In order to initiate margin trading, all a trader needs to do is transfer the funds (usually collateral) to an account that is at the margin. Most of the exchanges actually end up offering leverage of around 3x and go all the way up to 10x, which also depends on the market conditions and the asset’s volatility.
This indicator has, since February, gone down, even though the marking of BTC has reached a new all-time high of around $61,800. Regardless, any hike in the borrowing rate of Bitcoin is definitely going to reduce the leverage for the BTC shorts.
This implies that a Bitcoin support level of $60,000 shouldn’t be a surprise for any trader, as there is considerable room to bring up further leverage.
