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Bitcoin Shorts finally begin to wind up
Finally, the long-awaited short compression started to win thanks to Bitcoin (BTC). For those who did not know, over the past three weeks or so, the amount of money that BTC was missing on platforms like Bitfinex and BitMEX exploded, as news about the potential insolvency of Tether and Bitfinex and Binance hacking were considered as negative catalysts.
In fact, just a few hours ago, Bitfinex's capital held more than 30,000 BTCs (including margin). Yet while BTC continued to push higher, exceeding 6,400, 6,800, 7,200 and 7,300 dollars in quick succession, the shorts began to lose their shirt. According to a recent analysis by Willy Woo, a leading researcher, short positions on the two aforementioned platforms are being liquidated left and right.
As can be seen in the graph below, the number of shorts opened on Bitfinex has dropped considerably, dropping more than 2,000 BTC in the last hours, while the long ones have been opened en masse. At the same time, the funding of BitMEX has become positive, which means that deadlines now outweigh the gains.
In the eyes of some, this clearly indicates that the present rally is over. However, it is important to note that there is still a ton of proverbial shorts that have not yet bitten the dust, which means that there is even greater progression potential.
Once (or if) the squeeze is over, Woo expects the cryptocurrency market to return to more sustainable levels. As he wrote, once the peak is reached, "the price returns to the organic level … all this happens without activity on the channel. As this is a trading game, no real investor has subscribed to the rally. "
This confirms the opinion of analysts that Bitcoin currently reaches a local peak.
Trader Cantering Clark Explain that if the current move seems "incredibly bullish", BTC is still under resistance and is too much above its 20-week moving average. According to Clark, the 20-week moving average has and will likely continue to act as a Bollinger band in the center of Bitcoins, which means it is likely to move closer to that level in the near future.
He explains that in the current state of things, BTC is "three good standard deviations from the norm", this trend is fueled by short-circuits retail. This suggests that Bitcoin may soon see a retracement, returning to more organic and more sustainable levels as buying pressure slows in the coming weeks.
But, a new pressure could completely cancel this analysis.
Title Image provided by NG 978 on Unsplash
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