Bitcoin Margin Longs on Bitfinex Reach Two-Year Peak: Could BTC Hit $100K?
Margin longs for Bitcoin on the Bitfinex platform surged to their highest level in two years just before a sharp selloff affected both cryptocurrency and equity markets. Will traders see a rally ahead or will the downturn persist?
Key takeaways:
- Bitcoin margin longs on Bitfinex reached their highest point in two years, though arbitrage activity indicates this may not be a definitively bullish signal for price action.
- BTC prices declined as technology stock concerns and rising gold values pushed market participants toward risk-off positioning and defensive strategies.
The price of Bitcoin (BTC) dropped to its lowest point in more than two months on Thursday, testing support at the $84,000 level once again. The selloff occurred in tandem with a wider flight to safety after shares of Microsoft (MSFT US) plunged 11% amid news of higher capital expenditure plans and cloud server revenue figures that fell short of expectations.
Market participants are now examining why interest in bullish margin positions climbed to a two-year peak even as prices declined 26% during the last 90 days. Certain traders are concerned that heightened leverage could trigger additional forced liquidations, particularly after Thursday witnessed the elimination of $360 million worth of BTC futures positions.
Interest in margin longs on the Bitfinex platform climbed to its highest level since November 2023, with a total of 83,933 BTC. Although this represents a substantial nominal position valued at $7.3 billion, the cost to borrow remains below 0.01% on an annual basis due to Bitfinex's requirement for collateral deposits that surpass the loan value. Numerous traders opt for margin positions rather than futures contracts to circumvent the "carry cost," which presently sits around 5% annually for BTC futures.
BTC futures contracts with monthly expirations generally trade at a 5% to 10% annualized premium relative to spot markets, reflecting compensation for the extended settlement period. Bullish market phases typically drive this metric beyond the 10% neutral benchmark. The most recent occurrence was in early February 2025, during which Bitcoin was changing hands near $103,500.
Rising Bitfinex Bitcoin longs are neutral due to offsetting arbitrage
Professional market participants frequently employ "cash and carry" trading strategies to capitalize on the differential between futures and margin market rates. As a result, the overall effect of increasing Bitfinex longs is presumably neutral, given that the arbitrage approach necessitates concurrent selling of BTC futures contracts. For this reason, the surge in margin activity should not be viewed exclusively as anticipation of upward price action.
The hesitancy among Bitcoin traders can be partly traced to concerns surrounding excessive valuations in the artificial intelligence industry. Sundar Pichai, CEO of Google, stated there were "elements of irrationality" and recognized the substantial energy requirements of the continuously expanding AI infrastructure. According to the BBC, these elevated valuations have prompted numerous analysts to voice their doubts.
Microsoft, which carries a $3.5 trillion valuation, experienced an accelerated stock decline following its disclosure of $625 billion in "remaining performance obligations," representing outstanding contracts. Fortune reported that approximately $280 billion of this total is connected to OpenAI. This revelation has drawn scrutiny, considering Microsoft functions as both a principal investor and the cloud infrastructure provider for the organization.
Thursday's Bitcoin decline coincided with gold prices experiencing an 8% crash within less than 30 minutes, although the precious metal subsequently regained half of those losses. Bloomberg senior ETF analyst Eric Balchunas observed that the SPDR Gold Shares ETF (GLD US) registered trading volume surpassing $25 billion on Thursday, establishing a new record high.
As gold and silver achieve a combined market capitalization of $43.4 trillion, apprehensions are intensifying regarding a potential "debasement trade." This phenomenon indicates that investors are pursuing refuge in scarce assets despite fixed-income yields maintaining levels above 3.5%. In the final analysis, while margin longs on Bitfinex have increased, onchain metrics and derivatives market data reveal minimal evidence supporting a comprehensive bullish recovery.