Bitcoin (BTC) showed weakness on August 15, posting a 5% loss after testing the $25,000 resistance. The move has liquidated more than $150 million in long-leveraged positions and has led some traders to forecast a return to the annual low in the $18,000 range.
The price action coincided with deteriorating conditions for technology stocks, including Chinese giant Tencent, which is expected to record its first quarterly revenue decline. According to analysts, the Chinese gaming and social media conglomerate is expected to post a quarterly profit of about $19.5 billion, down 4% from the previous year.
In addition, on Aug. 16, the Citi investment bank downgraded Zoom Video Communications (ZM)’s recommendation to sell, adding that the stock is “high risk.” Analysts explained that challenging post-COVID dynamics, plus additional competition from Microsoft Teams, may have caused a 20% drop in ZM shares.
Overall bearish sentiment continues to plague crypto investors, a move described by influencer and trader @ChrisBTCbull, who said a simple $25,000 rejection caused traders to post sub-$17,000 targets.
After #Bitcoin did not break the price $25000, all CT started writing over the price again $16k-17k
I think it’s time to open long#trade
— Chris (@ChrisBTCbull) August 16, 2022
Margin traders remain optimistic despite the $25,000 rejection
Monitoring margin and options markets provides excellent insights to understand how professional traders are positioned. For example, a negative reading would happen if whales and market makers cut their exposure as BTC approached the $25,000 resistance.
Margin trading allows investors to borrow cryptocurrency to leverage their trading position, increasing returns. For example, one can increase exposure by borrowing stablecoins to buy an additional Bitcoin position.
On the other hand, Bitcoin borrowers can only short the cryptocurrency because they are betting on a falling price. Unlike futures contracts, the balance between margin longs and shorts is not always equal.
The chart above shows that OKX traders’ margin lending ratio has remained relatively stable near 14, while Bitcoin price rose 6.3% in two days only to be rejected after reaching resistance of $25,200.
In addition, the stat remains bullish by favoring the borrowing of stable coins with a wide margin. As a result, professional traders have maintained their bullish positions and no additional bearish margin trades emerged as Bitcoin pulled 5.5% on August 16.
Related: Bitcoin Miners Hold 27% Less BTC After 3 Months Of Big Sell
Options markets maintain a neutral stance
There is uncertainty as to whether Bitcoin will race again towards the $25,000 resistance, but the 25% delta skew is a telltale sign when arbitrage bureaus and market makers are overcharging for upside or downside protection.
The indicator compares similar call (buy) and put (sell) options and turns positive when fear prevails because the protective premium for put options is higher than risk call options.
The skew indicator will rise above 10% if traders fear a Bitcoin price crash. On the other hand, generalized arousal reflects a negative 10% skew.
As shown above, the 25% delta skew has barely moved since August 11, usually fluctuating between 5% and 7%. This range is considered neutral because options traders price in a similar risk from unexpected pumps or dumps.
Had pro traders entered a “fear” sentiment, this stat would have topped 10%, indicating a lack of interest in providing downside protection.
Despite the neutral Bitcoin options indicator, the OKX margin lending rate showed whales and market makers maintaining their bullish bets after BTC price plunged 5.5% on Aug. 16. For this reason, investors should expect another retest of the $25,000 resistance once global macroeconomic conditions improve.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risks. You should do your own research when making a decision.