Leverage buying surges despite Bitcoin plunge… “Not a bull-market signal”

As Bitcoin (BTC) prices slid to a two-month low and threatened the $84,000 level, an unusual phenomenon has emerged: a sharp increase in Bitcoin buying financed with large amounts of borrowing.

According to Cointelegraph on the 29th (local time), Bitcoin margin long (buy) positions on the crypto exchange Bitfinex totaled 83,933 BTC. In value terms, that is about $7.3 billion, the highest level since November 2023.

Typically, when prices drop sharply, leveraged positions are reduced to avoid the risk of forced liquidation (margin calls). However, even as Bitcoin has fallen about 26% over the past 90 days, margin long balances betting on a rise have instead jumped to a two-year high, moving in the opposite direction of the price.

The market suggests it is a stretch to interpret this simply as bargain hunting. Experts say the move is tied to sophisticated spot-futures arbitrage strategies.

On Bitfinex, the margin borrowing rate for Bitcoin is effectively near zero, at less than 0.01% per year. By contrast, the premium earned from maintaining positions in the futures market is around 5% per year. This has led to an explanation that institutional investors are borrowing spot at low rates to buy, while simultaneously taking short positions in the futures market to lock in returns equal to the interest-rate differential.

In this case, it is less a directional bet on prices than a trade targeting a structural rate spread. Indeed, the Bitcoin futures premium—a gauge for assessing whether the market is in a bull phase—remains below 10%, a level often seen as a benchmark. That is why the surge in margin long positions is difficult to read as an immediate price rebound or a bull-market signal.