Bitfinex Margin Longs Decline 18% Despite Bitcoin's 23.7% Surge

Coin WorldFriday, May 16, 2025 3:22 pm ET
2min read

Bitfinex, a prominent cryptocurrency exchange, has seen a significant shift in its margin trading positions for Bitcoin (BTC). Over the past 30 days, while the price of Bitcoin has surged by 23.7%, the exchange's margin longs have decreased by 18%. This reduction translates to a drop from 80,387 BTC to 65,889 BTC between April 16 and May 16. Despite this decline, the total value of long positions remains substantial at $6.8 billion, dwarfing the $25 million in short positions. This disparity suggests that while there has been some profit-taking, the overall sentiment among professional traders remains bullish.

The decrease in margin longs could be attributed to healthy profit-taking rather than a shift towards bearish sentiment. The timing of this reduction is notable, as it occurred after Bitcoin's price jumped above $100,000 on May 8, approximately three weeks after the margin longs peaked. This indicates that traders may be securing profits at higher price levels, which is a common strategy in bull markets. The significant

between long and short positions further supports the idea that traders are not turning bearish but rather adjusting their positions to manage risk.

One factor contributing to the difference in long and short positions is Bitfinex's low annual interest rate for margin trading, which stands at 0.7%. In contrast, those using leverage for 90-day Bitcoin futures are paying a 6.3% annualized premium. This rate difference creates arbitrage opportunities, where traders can open Bitcoin longs on margin and simultaneously sell an equivalent position in BTC futures to benefit from the rate disparity. Margin traders, known for their longer time frames and higher risk tolerance, are less affected by short-term price movements, making their position changes more strategic and less reactive.

To gain a broader perspective, it is useful to examine Bitcoin options. The 25%

skew, a metric that indicates market sentiment, currently stands at -6%. This figure suggests confidence in Bitcoin's price, as a reading below -6% is typically associated with bullish periods. The data over the past two weeks has ranged from neutral to slightly bullish, indicating that whales and market makers are not overly concerned about Bitcoin's repeated failures to break above the $105,000 barrier. This optimism is further bolstered by the $2.4 billion net inflows into US spot Bitcoin exchange-traded funds (ETFs) between May 1 and May 15, demonstrating that institutional investors remain bullish on Bitcoin.

In summary, the reduction in Bitfinex's margin longs, while notable, does not indicate a bearish turn among professional traders. The substantial gap between long and short positions, along with the bullish sentiment in the options market and institutional inflows, suggests that traders remain optimistic about Bitcoin's price outlook. The current data does not provide a clear indication of whether Bitcoin is closer to breaking above $105,000, but the $6.8 billion in leveraged margin longs underscores the high level of confidence among professional traders.