Crypto traders are taking advantage of Bitcoin’s recent price drop, buying the dip as BTC ($88,879.70) falls to a three-month low, according to Kraken’s Head of Derivatives Alexia Theodorou.
Bitcoin Investors Are ‘Buying the Dip’ as BTC Drops Below $88K, According to Kraken Reports
Bitcoin briefly fell below $88,000 on Tuesday as Nasdaq futures signaled continued risk aversion, while the Japanese yen, generally considered a safe haven, held firm against the U.S. dollar.
The decline came after a $1 billion increase in open futures positions on Binance, with many traders shorting BTC in anticipation of further declines.
Kraken Investors Expect a Recovery
Despite the decline, bullish traders on Kraken are loading up on long positions, pushing the perpetual-term long-to-short ratio to a record high of 0.8.
“Despite Bitcoin’s price falling below $90,000, Kraken has seen an increase in traders opening long positions in the BTC perpetual market,” Theodorou said. “The long/short ratio has climbed to a record high of 0.8, while the number of open interests has also reached its highest level in four weeks. This suggests that investors are anticipating a recovery and are effectively ‘buying the dip.’”
While dip buying signals positive sentiment, the long-short ratio remains below 1, meaning short positions are still greater than long positions.
“While this ratio signals underlying optimism, liquidations remain at relatively normal levels, suggesting that excessive leverage still exists,” Theodorou added. “This could leave the market vulnerable to further downside, possibly in the form of a prolonged squeeze in the near term.”
Bitcoin’s price action in the coming days will determine whether this dip-buying strategy will work or if the bearish momentum will continue to pull BTC lower.
*This is not investment advice.
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