Bitcoin Slides to Two-Month Low — But Margin Longs Just Hit a 2-Year High

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• Bitcoin retested $84,000 as risk-off sentiment hit both crypto and equities.
  
• Bitfinex margin longs reached their highest level since late 2023.
  
• Derivatives data suggests positioning is largely neutral, not outright bullish.

Bitcoin slid to its lowest level in more than two months on Thursday, briefly dipping below the $84,000 mark as global markets shifted toward a risk-off stance. The move came as U.S. tech stocks sold off sharply, led by Microsoft’s 11% drop following concerns over rising capital expenditures and slower-than-expected cloud server revenue.

The decline adds to a difficult quarter for BTC, which is now down roughly 26% over the past 90 days. Yet, in a seeming contradiction, demand for bullish margin positions has surged to levels not seen in two years — raising questions about whether traders are positioning for a rebound or quietly hedging risk.

Bitcoin Price Pressure Builds as Liquidations Mount

Thursday’s downturn triggered a wave of forced selling across derivatives markets. Roughly $360 million in Bitcoin futures positions were liquidated, reflecting how fragile positioning has become as prices hover near key technical support.

Such liquidations tend to amplify downside moves, especially when leverage is elevated. The latest drop underscores how quickly sentiment can flip in a market still dominated by speculative capital.

Despite the volatility, spot demand has shown few signs of aggressive accumulation, suggesting the recent bounce attempts may lack strong conviction.

Bitfinex Margin Longs Hit Two-Year High

One of the most eye-catching developments is the rise in Bitcoin margin longs on Bitfinex, which have climbed to about 83,900 BTC — the highest level since November 2023. At face value, that figure represents over $7 billion in notional exposure.

However, low borrowing costs — currently below 0.01% annually — help explain the surge. Many professional traders favor margin borrowing over futures because futures contracts carry an annualized premium near 5%, making them more expensive to hold over time.

In practice, these margin longs are often paired with short futures positions as part of a “cash-and-carry” arbitrage strategy. That structure means the net directional exposure is close to neutral, rather than outright bullish.

Macro Fears and AI Valuation Concerns Weigh on Sentiment

Beyond crypto-specific factors, broader market anxiety is playing a role. Executives and analysts have begun warning that parts of the artificial intelligence sector may be overheated, with massive infrastructure spending and uncertain returns.

The nervousness spilled into traditional safe-haven markets as well. Gold briefly fell around 8% in minutes before recovering part of the drop, while trading volume in the largest gold ETF surged to record levels. The episode highlights how jittery investors have become across asset classes.

Also Read: Chainlink and Bitcoin at Risk: Are Major Sell-Offs Coming?

At the same time, gold and silver now represent a combined market capitalization exceeding $43 trillion, reinforcing the narrative that capital is rotating toward scarce assets as protection against currency debasement.

Bitcoin’s sharp pullback and rising leverage present a mixed picture. While margin longs on Bitfinex have surged, derivatives pricing and onchain signals do not yet point to a broad-based bullish recovery. For now, BTC appears stuck between macro-driven risk aversion and long-term scarcity narratives — leaving traders cautious as volatility remains elevated.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.