Decentral Block Post

Crypto traders' urge to create leverage positions with Bitcoin (BTC) appears irresistible to many people, but it's impossible to know if these traders are extreme risk-takers or savvy market makers hedging their positions. The need to maintain hedges holds even if traders rely on leverage merely to reduce their counterparty exposure by maintaining a collateral deposit and the bulk of their position on cold wallets.

Not all leverage is reckless

Regardless of the reason for traders' use of leverage, currently there is a highly unusual imbalance in margin lending markets that favors BTC longs betting on a price increase. Despite this, so far, the movement has been restricted on margin markets because the BTC futures markets remained relatively calm throughout 2023.

Margin markets operate differently from futures contracts in two main areas. Those are not derivatives contracts, meaning the trade happens on the same order book as regular spot trading and unlike futures contracts, the balance between margin longs and shorts is not always matched.

For instance, after buying 20 Bitcoin using margin, one can literally withdraw the coins from the exchange. Of course, there must be some form of collateral, or a margin deposit, for the trade and this is usually based on stablecoins. If the borrower fails to return the position, the exchange will automatically liquidate the margin to repay the lender.

The borrower must also pay an interest rate for the BTC bought with margin. The operational procedures will vary between marketplaces held by centralized and decentralized exchanges, but usually the lender gets to decide the rate and duration of the offers.

In this week’s episode of Market Talks, Cointelegraph welcomes Adrian Zduńczyk, or as he is known on Twitter, CryptoBirb. He is the founder and CEO of The Birb Nest, a trading community platform. He is also a chartered market technician, chemical engineer, entrepreneur, mentor and influencer with over 655,000 followers on Twitter.

We start things off with a simple question: What is Zduńczyk’s general approach or set of procedures that he goes through when he begins to connect with the markets in the mornings? How does he begin to decide if he should trade on any given day or stay away altogether? What are some comprehensive metrics that he looks at to gauge the overall market direction and sentiment, especially when studying altcoins? 

There was a lot of excitement at the start of 2023 with Bitcoin (BTC) finally breaking out of its sideways action and making a move toward the upside. Now that things have settled down a bit and the price of Bitcoin is lingering around the $23,000 range, we ask Zduńczyk how he feels about the market and if there are any coins that stand out to him during this time.

The next Bitcoin halving is still about a year and a month away, yet people are already starting to talk about it and formulate strategies for it. We get Zduńczyk’s insights into how he thinks this cycle might be developing.

It’s already March, and it seems that Zduńczyk thinks that it might not be as kind as February was for Bitcoin — we ask him for his reasoning behind this claim. Bitcoin seems to be touching the $25,000 mark and coming back down to hover around $23,000. What needs to happen for Bitcoin to flip $25,000 to support and move past it?