The price of Bitcoin (BTC) dropped significantly on Thursday, reaching its lowest level in over two months at approximately $84,000. This decline coincided with a broader trend of risk aversion among investors, particularly following a sharp 11% drop in Microsoft (MSFT US) shares due to disappointing revenue reports and increased capital expenditures.
Despite the price decline of around 26% over the past 90 days, margin longs at Bitfinex surged to a two-year high, totaling 83,933 BTC with a market value of approximately $7.3 billion. The borrowing cost for these positions remains low, under 0.01% annually, as collateral requirements exceed loan values. Traders are favoring margin positions over futures to circumvent the higher carry costs associated with BTC futures, currently around 5% per year.
Traders are cautious, as the increase in margin longs does not necessarily indicate bullish sentiment. The arbitrage strategies often employed by professional traders suggest that the net effect of this uptick may be neutral, as selling BTC futures contracts often accompanies these margin positions. Concerns about overvaluation in the artificial intelligence sector, as highlighted by Sundar Pichai, CEO of Google, may also be contributing to the overall lack of confidence within the Bitcoin trading community.