Today Bitcoin (BTC) price rallied to a new all-time high at $44,900 presently after Tesla announced a $1.5 billion investment. This event triggered $555 million worth of shorts to be liquidated in two hours and it happened every bit Bitcoin futures open interest reached $13.7 billion, which is just 3% below its historical high.

These cost moves drastically increased the cost of carrying long positions, mainly for those using perpetual futures. This indicator raised a yellow flag on how leveraged those investors are and their potential toll impact.

BTC futures open up interest in USD. Source: Bybt.com

Every bit shown adove, the amass BTC futures open interest just reached a $15 billion all-fourth dimension high.

Whenever unexpected positive news hits the market, it is natural for players to enter extreme leverage positions. This happens both for the short sellers, whose margins diminish due to losses, and the long buyers who tend to increase their positions.

Shorts with insufficient margin get liquidated as their positions are forcefully terminated and their leveraged decreases. On the other hand, the longs are profiting, thus increasing the position doesn't increase their leverage equally much.

Subsequently the initial pump it's expected that the funding charge per unit increases and the fees paid by longs to continue their perpetual futures (inverse swaps) open rises.

BTC perpetual futures 8-60 minutes funding rate. Source: Bybt.com

As depicted in a higher place, the viii 60 minutes fee charged to recoup for the eventual leverage imbalance between longs and shorts has merely touched 0.25%. This rate is equivalent to v.4% per week, which is quite meaning for its holders.

One should note that even if Bitcoin continues to appreciate, every bit seen on Jan. 29, the funding rate tends to adapt itself. Two main reasons fueled this: leveraged buyers depositing more than funds and arbitrage desks shorting the perpetual futures while simultaneously ownership spot BTC.

A funding rate varying from 0.05% to 0.10% per 8 hours is standard and expected during a balderdash market. This indicator would signify a iv.6% to 9.4% monthly fee and wouldn't be problematic to leveraged longs.

To empathise how whales and arbitrage desks may have positioned themselves during this menstruum, taking a closer look at the height traders' long-to-short ratio at major exchanges is useful.

OKEx traders bought ahead of the pump

Top traders BTC long/curt ratio. Source: Bybt.com

Binance top traders held a 33% net long position favoring longs ahead of the February. eight rally, and this is slightly to a higher place their 26% 2-week boilerplate. As soon every bit the Tesla news hit the press, they increased longs and pushe the indicator to 46% which is its highest level in well-nigh a calendar month.

Huobi top traders, on the other manus, remained relatively unaffected by the news. Their net position stood at 0.74, meaning 26% favored shorts alee of Feb. viii. Their electric current 28% cyberspace curt position remains in line with the previous 2-week average.

Lastly, OKEx tiptop traders increased their cyberspace longs from Feb. vi to the early on hours of February. eight, reaching a fourteen% cyberspace long position. Somehow correctly predicting the rally, those traders aggressively reduced net longs equally BTC reached its best high.

The momentary hefty funding charge per unit may exist an inconvience for longs only currently there is no sign of excessive leverage from buyers. At least for those large market place makers and arbitrage desks that compose nearly exchanges' top traders.

This suggests that in that location is room for farther price appreciation from Bitcoin.

The views and opinions expressed here are solely those of the autho r and practice not necessarily reflect the views of Cointelegraph. Every investment and trading move involves take a chance. You should behave your own research when making a determination.