Why Bitcoin bulls remain upbeat despite primary BTC market metric falls to a new low.

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Bitcoin’s long-to-short ratio has fallen to a five-month low, but bears aren’t biting, indicating that bulls remain in charge of the BTC price.

Margin investing enables an individual to borrow capital or cryptocurrencies in order to manipulate their trading position and maximise the size or anticipated profit. Borrowing Tether (USDT), for example, allows you to purchase Bitcoin (BTC), increasing your visibility. While borrowing involves an interest rate, the trader expects BTC’s price inflation to pay for it.

Newer traders can be ignorant, but investors may borrow BTC to margin trade a short spot, betting on price decline. This is why some observers monitor overall lending volumes of Bitcoin and Tether to determine whether buyers are bullish or bearish.

Surprisingly, details reveal that, even though Bitcoin’s price approaches a fresh all-time record, the BTC/USDT borrow ratio on OKEx has dropped to its lowest level since Nov. 20, 2020. Although this number still supports bulls, it begs the question of what is driving the move.


Bitcoin price in USD (above) and USDT/BTC lending ratio (below). Source: TradingView, OKEx

When traders borrow USDT or other stablecoins, they are more likely using them to speculate on cryptocurrencies. BTC borrowing, on the other hand, is mostly used for short positions.

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This means that if the USDT/BTC lending ratio rises, the economy is angled in a bullish direction. The inverse trend suggests increased demand for Bitcoin shorts.

USDT loans on OKEx have been about eight times higher than Bitcoin-denominated loans, as seen in the map above. Despite being on the bullish side, this is close to the lowest amount since November 17, 2020.

Borrowing rates for the bears have never been this low

Margin transactions, as opposed to perpetual derivatives (inverse swaps), take place in normal spot markets. To begin margin trading, a trader simply transfers collateral funds to a margin account. Most exchanges have 3x to 10x leverage, depending on the volatility of the commodity and market conditions.

Despite BTC setting a new all-time high of $61,800 and maintaining daily candle closes above $55,000 for the past 17 days, this indicator has halved since late February. Nonetheless, if the Bitcoin funding rate rises, BTC shorts would certainly reduce their leverage.


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Bitfinex BTC short-term lending rate. Source: BFX Rates

According to Bitfinex numbers, BTC’s short-term lending rate has dropped to 1% per year. As a result, high costs are undoubtedly not driving the much smaller BTC borrowing operation. While OKEx does not have a map, data from Coinlend shows that the Poloniex and Quoine exchanges followed a similar pattern.

Bulls kept their long positions despite the fee increase

Traders who expect a downward price swing must borrow BTC in order to margin trade a short position. Even in this case, they would have to pay interest to convert it to US dollars or stablecoin. To complete the loan, the buyer must repurchase the BTC in the hopes of getting a cheaper price and return it to the lender with the extra interest.

Bitfinex USD short-term lending rate. Source: BFX Rates

This time, there was a significant increase in the USD lending rate in mid-March when Bitcoin reached $60,000. The leveraged long hysteria soon subsided when BTC fell 13% in the following days, causing fiat and stablecoin borrowing prices to normalise.

Traders looking to borrow USD or stablecoins to purchase Bitcoin have been paying rates ranging from 15% to 23% a year in recent weeks. This rate is most definitely the reason why the OKEx USDT and BTC borrow ratio has not increased amid Bitcoin’s price surge.

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Right now, the lending ratio favors bulls

A meagre annualised charge of 1% was not enough to entice creditors to short Bitcoin, which is a promising sign. The interest rate would have risen if there had been any need for it.

As a result, traders do not see the OKEx margin lending ratio reaching its lowest level in five months as a bearish warning.

Even though a 23 percent margin rate for longs is prohibitively high, there is still space for additional leverage. As a result, it should come as no surprise that $60,000 has become a funding standard for Bitcoin.

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