Bitfinex Leverage Long Positions Surge to Six-Month High
Often regarded as a leading indicator of a bull market, Bitfinex’s leverage long activity has been rapidly increasing since mid-February, with related positions reaching their highest levels in nearly six months.
According to data from TradingView, the leverage long positions (Margin Long Position, involving the use of borrowed funds to purchase assets in the spot market) on the cryptocurrency exchange Bitfinex reached 80,333 BTC on Thursday, equivalent to $6.92 billion, marking a new high since October last year. Notably, since February 20, the leverage long positions on Bitfinex have increased by 27.5%.
Bitcoin price compared to leverage long positions on Bitfinex, source: TradingView
This has led some market participants to speculate that Bitcoin’s recent rise of nearly 10% from a low of $76,700 is driven by leverage and may not be sustainable. In fact, Bitcoin’s price does not always move in sync with these position increases; for example, the leverage long positions on Bitfinex increased by over 37,000 BTC from mid-March to mid-September 2024, while the price of Bitcoin oscillated down from a high of $73,000 to around $54,000 during that period. However, in the long run, these savvy investors often succeed in timing the market.
In November last year (around the time of the U.S. presidential election of Donald Trump), Bitcoin finally broke away from its range and initiated a new wave of increases, while the accumulated leverage long positions on Bitfinex decreased by about 30% by the end of the year.
However, since the cost of borrowing Bitcoin remains relatively low, these traders may simply be engaging in arbitrage trading. Even if it is assumed that they are indeed betting on a subsequent rise in Bitcoin, other exchanges may offset this to some extent. For example, during the same 30-day period, the demand for leverage longs on Bitcoin at the OKX exchange significantly declined.
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