Bitcoin (BTC) Traders Are 'Buying the Dip' on Kraken as the Price Slides to a 3-Month Low: Derivatives Head

Crypto traders are buying bitcoin (BTC) on Kraken, one of the 10 biggest cryptocurrency exchanges, as the price slides to a three-month low, Alexia Theodorou, head of derivatives told CoinDesk.

As the price of bitcoin (BTC) slid to a three-month low, crypto traders are buying the dip on Kraken, with a record number of traders opening long positions on the BTC perpetual markets, Alexia Theodorou, head of derivatives at Kraken, told CoinDesk.

BTC dropped to $87,924 at the time of writing, as Nasdaq futures pointed to continued risk aversion on Wall Street, while the yen, a safe-haven during times of market turmoil, held firm against the U.S. dollar and growth-sensitive commodity currencies, like the Australian dollar.

The decline follows a $1 billion increase in open futures positions on Binance on Monday, which is likely due to traders opening shorts in anticipation of a deeper price drop. However, bargain hunters stepped in on Kraken, pushing the perpetual long-short ratio to a record high of 0.8. The ratio measures the proportion of buy positions open relative to active sell positions at any given time.

“Despite bitcoin's price dropping below $90K, Kraken has seen a surge in traders opening long positions on its BTC perpetual markets,” said Theodorou in an interview. "The long/short ratio has climbed to a record high of ~0.8, while open interest has reached a four-week high. This suggests traders could be anticipating a rebound and effectively 'buying the dip.'"

While the record high ratio on Kraken is a positive sign for the bulls, the long-short ratio is still below 1, meaning there are still more shorts than longs on the exchange.

“While this speaks to the underlying positive sentiment in the market, liquidations are still at relatively normal levels, meaning that there may still be excess leverage in the system,” said Theodorou. "This could potentially leave the market vulnerable to further downside moves, possibly in the shape of a long squeeze, in the near-term."