Binance Data Could Be a Bearish Sign for Bitcoin: It Dropped Below 1
Data from Binance, the world's largest cryptocurrency exchange, could be a sign of a correction for Bitcoin in the short term.
The Bitcoin long/short ratio on Binance recently dropped to 0.73. This ratio shows changes over time by dividing the net long and net short positions of the 20 percent of users with the highest margin balance on BTC by the total accounts.
Since Bitcoin broke a record at $73,650 on March 13, local peaks are usually seen in the BTC price when this ratio approaches 0.9. For example, when the ratio reached 0.9 on March 11, the price of BTC fell by 6 percent the following week. Similarly, when the ratio rose to 0.99 on April 8, the Bitcoin price lost 11 percent in seven days.
This trend continued on May 5. The ratio had risen to 1.14 and had fallen sharply from 3.39 four days earlier. This caused the BTC price to drop by 5 percent in a week. A similar downtrend occurred on June 6, when it fell to 0.97, which also led to a 5 percent decline in BTC.
A short-term correction may be coming for Bitcoin
A similar situation was seen today when this ratio fell to 0.79. Bitcoin experienced an 18 percent collapse the week after that. Again, on August 24, the ratio fell below 1, and Bitcoin lost 11 percent in a week.
This data reveals a trend that may be important for investors. When the BTC long/short ratio on Binance approaches or falls below 1, Bitcoin tends to decline significantly in a short period of time.
Stay tuned for new information.