25-2-2025 – Cryptocurrency exchange Kraken has witnessed an unprecedented surge in Bitcoin buying activity, despite the premier digital currency plummeting below $88,000, marking its lowest point in three months. According to Alexia Theodorou, the exchange’s head of derivatives, this counter-intuitive trading behaviour suggests a growing appetite for ‘buying the dip’ amongst savvy investors.
The downturn coincides with broader market uncertainty, reflected in declining Nasdaq futures and the Japanese yen’s robust performance against both the US dollar and commodity-sensitive currencies such as the Australian dollar. This market sentiment has been further complicated by a substantial $1 billion expansion in open futures positions on Binance, largely attributed to traders establishing short positions in anticipation of further price deterioration.
Nevertheless, Kraken’s perpetual long-short ratio has achieved an historic peak of 0.8, indicating a significant uptick in purchase positions relative to sell orders. “The surge in long positions, coupled with open interest reaching a four-week high, suggests traders are positioning themselves for a potential market rebound,” Theodorou elaborated during our discussion.
Despite this optimistic trading pattern, market analysts remain cautious. The long-short ratio’s position below the crucial threshold of 1 indicates that bearish positions continue to outweigh bullish ones on the exchange. Theodorou further noted that whilst the record ratio reflects positive market sentiment, the presence of normal liquidation levels suggests persistent leverage in the system, potentially leaving the market susceptible to downside risks, particularly in the form of a long squeeze in the immediate term.
