Bitcoin’s price fell to a two-month low near $84,000, coinciding with a broader flight from risk assets. A surge in margin long positions on the Bitfinex exchange to a two-year high of $7.3 billion is not a clear bullish signal, as professional arbitrage strategies likely offset the impact. The sell-off followed an 11% drop in Microsoft shares and record trading in gold ETFs, indicating investor caution.
Bitcoin’s price retested $84,000 support, its lowest level in over two months. This decline aligned with risk aversion after Microsoft shares fell 11% on reports of increased capital expenditures and disappointing cloud revenue.
Margin long positions on Bitfinex reached 83,933 BTC, a two-year high worth $7.3 billion. Despite the price dropping 26% over 90 days, traders use this low-cost borrowing to avoid the roughly 5% annual premium on BTC futures contracts.
Professional “cash and carry” arbitrage exploits the rate gap between futures and margin markets. Therefore, the net impact of rising Bitfinex longs is likely neutral, as it requires simultaneously selling futures contracts.
Concerns over tech sector overvaluation contributed to the lack of trader confidence. Google CEO Sundar Pichai said there were “elements of irrationality” in AI, according to the BBC.
Microsoft’s $625 billion in unpaid contracts raised eyebrows, as Fortune noted nearly $280 billion is linked to OpenAI. Bitcoin’s dip coincided with gold crashing 8% before a partial recovery.
The SPDR Gold Shares ETF saw a record $25 billion in trading volume. With gold and silver’s combined market cap at $43.4 trillion, concerns mount over a potential “debasement trade” favoring scarce assets.
