$AVA rose from the daily close of 0.2325 on October 12 to 0.4227 this morning, gaining as much as 82%. The daily RSI reached 82.4, its highest reading in nearly 300 days. But on Binance futures, the largest share of newly opened positions in this move came from large-trader shorts.
From 5 p.m. yesterday to 8 a.m. this morning, futures open interest, measured in coins, rose from 9.49 million to 14.07 million, an increase of 48%. Over the same period, the share of large traders’ positions that were long fell from 57.8% to 50.4%, and the long/short ratio dropped from 1.37 to 1.02. Retail accounts going long stayed between 52% and 54%. Open interest surged while large traders grew increasingly bearish; my read is that shorts made up a heavier share of the new positions. Open interest rose most sharply during the several hours between 11 p.m. and 6 a.m. The average futures trading price during that stretch was around 0.377, which gives us a rough estimate of the cost basis for these shorts.
I wrote about AVA once before, at midday on October 14. New positions were also skewed bearish then, but the funding rate was -0.040%, meaning shorts were paying every four hours. I figured price would first hit 0.2852; it surged to 0.3207 that afternoon, so that call was right. The biggest difference this time is the funding rate: the 8 a.m. settlement this morning was -0.0036%, basically zero. Shorts can hold their positions at almost no cost, with no time pressure forcing them to cover.
Now let’s look at price itself. It tested above 0.40 three times, at 2 a.m., 5 a.m., and 8 a.m., reaching a high of 0.4227, but hasn’t managed to hold above that level. The upper daily Bollinger Band is at 0.3524, and price is 11% above it. The daily ATR(14) is 0.0407, meaning a normal day’s move is around 10%. The 0.377 cost-basis level lines up almost exactly with this morning’s 7 a.m. low of 0.3726.
My view is that the funding rate isn’t forcing a short squeeze, and these large-trader shorts can afford to wait. In the short term, a move back toward 0.377 to test the shorts’ cost basis seems more likely. A four-hour close below 0.3726 would put 0.3524 in view next. A four-hour close above 0.4227, together with the large traders’ long-position share returning to above 53%, would be the sign that shorts are being squeezed.
I’m not holding a position in this move, and I’m not going to short a coin with a daily RSI of 82. Today I’m watching just one price: 0.377. If it holds, the shorts are in trouble; if it doesn’t, the large traders will have won the first round.
#AVA #LargeTraderPositions
From 5 p.m. yesterday to 8 a.m. this morning, futures open interest, measured in coins, rose from 9.49 million to 14.07 million, an increase of 48%. Over the same period, the share of large traders’ positions that were long fell from 57.8% to 50.4%, and the long/short ratio dropped from 1.37 to 1.02. Retail accounts going long stayed between 52% and 54%. Open interest surged while large traders grew increasingly bearish; my read is that shorts made up a heavier share of the new positions. Open interest rose most sharply during the several hours between 11 p.m. and 6 a.m. The average futures trading price during that stretch was around 0.377, which gives us a rough estimate of the cost basis for these shorts.
I wrote about AVA once before, at midday on October 14. New positions were also skewed bearish then, but the funding rate was -0.040%, meaning shorts were paying every four hours. I figured price would first hit 0.2852; it surged to 0.3207 that afternoon, so that call was right. The biggest difference this time is the funding rate: the 8 a.m. settlement this morning was -0.0036%, basically zero. Shorts can hold their positions at almost no cost, with no time pressure forcing them to cover.
Now let’s look at price itself. It tested above 0.40 three times, at 2 a.m., 5 a.m., and 8 a.m., reaching a high of 0.4227, but hasn’t managed to hold above that level. The upper daily Bollinger Band is at 0.3524, and price is 11% above it. The daily ATR(14) is 0.0407, meaning a normal day’s move is around 10%. The 0.377 cost-basis level lines up almost exactly with this morning’s 7 a.m. low of 0.3726.
My view is that the funding rate isn’t forcing a short squeeze, and these large-trader shorts can afford to wait. In the short term, a move back toward 0.377 to test the shorts’ cost basis seems more likely. A four-hour close below 0.3726 would put 0.3524 in view next. A four-hour close above 0.4227, together with the large traders’ long-position share returning to above 53%, would be the sign that shorts are being squeezed.
I’m not holding a position in this move, and I’m not going to short a coin with a daily RSI of 82. Today I’m watching just one price: 0.377. If it holds, the shorts are in trouble; if it doesn’t, the large traders will have won the first round.
#AVA #LargeTraderPositions