Bullish Bitcoin (BTC) margin positions on Bitfinex exchange surge to their highest level in nearly six months

Bitcoin (BTC) margin positions using leverage on the Bitfinex exchange surged to their highest level in nearly six months, reaching 80,333 BTC

Optimistic Bitcoin (BTC) positions utilizing leverage on the Bitfinex exchange have soared to their highest level in nearly six months, reaching 80,333 BTC on March 20. This amounts to approximately $6.92 billion at the prevailing exchange rate.

These leveraged long positions, also known as margin longs, have experienced a 27.5% surge since February 20, according to Ben Armstrong, host of the "Armstrong & Associates" show. This substantial increase has fueled speculation that the 12.5% gain in Bitcoin's price from the $76,700 low hit on March 11 is being driven by leverage and may not be sustainable.

However, it's important to note that Bitcoin's price movements do not always directly correspond to the shifts in bullish leveraged positions on Bitfinex. For instance, over the three-week period ending July 12, large investors added 13,620 BTC in margin longs, while Bitcoin's price slipped from $65,500 to $58,000. Similarly, a two-week increase of 8,990 BTC in margin longs took place leading into September 11, and this coincided with a price decline from $60,000.

In the long term, these savvy investors have timed the market well, as Bitcoin's price eventually surpassed $88,000 in November, and the margin long positions were reduced by 30% by year-end. Essentially, these traders are highly profitable but exhibit a much higher risk tolerance and patience than the average investor.

An increase in leverage demand does not necessarily translate into upward pressure on Bitcoin's price. For instance, despite the substantial rise in margin longs on Bitfinex, there has been a corresponding decrease in demand for leveraged long positions on other exchanges, such as OKX.

Over the same 30-day period, demand for Bitcoin margin longs has declined significantly on OKX. The Bitcoin long-to-short margin ratio on OKX currently shows longs outperforming shorts by a factor of 15, the lowest level in over three months.

Historically, excessive confidence has driven this ratio above 40, most recently in late February when Bitcoin's price surged past $105,000. Conversely, a ratio below 5 typically signals a strong bearish sentiment.

To rule out external factors limited to margin markets, one should also analyze Bitcoin options. If traders anticipate a correction, demand for put (sell) options will rise, pushing the 25% delta skew above 6%. Conversely, during bullish periods, this metric typically falls below -6%.

Between March 10 and March 18, the Bitcoin options market showed signs of bearish sentiment but has since shifted to a neutral stance. This suggests that whales and market makers are pricing similar risks for both upward and downward price movements.

Given the margin market trends on OKX and the current pricing of BTC options, a Bitcoin bull run is far from a consensus expectation.

Bitcoin's lack of bullish momentum can partly be attributed to the higher inflation outlook and weaker economic growth projections presented by the US Federal Reserve on Monday.

Concerns over a potential recession, exacerbated by a global tariff war, have made investors more risk-averse. As a result, even though whales are increasing their exposure through Bitcoin margin longs, overall market sentiment remains subdued.