bitcoin (B T c) The bulls should be prepared for a possible attack from the bears as the number of margined short positions on Bitfinex increases to a little over 378%.
Most commonly known by the ticker BTCUSD shorts, the dataset records the number of bearish positions in the bitcoin market. In simple words, traders borrow funds from their broker – Bitfinex – to bet on bearish outcomes for the BTC/USD instrument. Meanwhile, the value of open short positions is measured in BTC.
The number of low-margin positions on Bitfinex reached a high of 6,468.2202 BTC this Monday, up 378% from the previous session’s low of 1,351.72 BTC.
The spike has led some analysts to be concerned about a possible price crash in the bitcoin spot market, primarily because a similar wild BTCUSD shorts uptrend early last month pushed the BTC/USD exchange rate to around 13,000 on May 19. dollar was reduced.
For example, independent market researcher Fomocap tweeted A chart showing a clear relationship between the bitcoin spot rate and its margined short positions. The analyst highlighted two examples and noted that the two metrics moved in opposite directions with some lag.
His first example shows that on May 25, the BTCUSD shorts went down, which was Later led the price rally bitcoin spot market.
The second example shows the bitcoin spot price crashing after a spike in BTCUSD shorts.
eBlockChain, a TradingView.com contributor, said first monday That BTCUSD shorts 200% and above is a “strong sign” of an imminent dump in the bitcoin spot market. The analyst said:
“It can be triggered in a [matter] a few hours [to] Maximum three days.”
Meanwhile, long margin positions
The boldly bearish statement for bitcoin also came as its margin-long positions continued to rise.
BTCUSD Longs, another Bitfinex dataset that records the number of bullish margin positions, rose to 44,538.6579 BTC on Monday. So it appears, bitcoin’s long exposure exceeded short exposure overall, indicating that, for traders, the direction of least risk was upward.
But a sudden drop in the bitcoin spot price could prompt leveraged long holders to dump their BTCUSD positions, which in turn fuels further selling. Such an event is calledlong squeezeFor example, the May 19 price crash wiped out nearly $7.5 billion of long-leveraged positions in the cryptocurrency derivatives market.
Crypto trader Jacob Canfield provided an optimistic outlook for bitcoin after the May crash. Last week, the analyst said bitcoin has already fallen by more than 40% since its May long squeeze – and is now less likely to face another significant bearish move.
After a long squeeze and liquidity is taken to the bottom.
Liquidity is usually engineered upwards and shorts get trapped thinking that more downside is coming.
We have already got a drop of 40%.
Now it’s the bear’s turn to recover again.
— jacob canfield (@jacobCanfield) 2 June 2021
Meanwhile, after the May 19 crash, the cost of funding long positions in the bitcoin derivatives market remained largely below zero. Negative funding rates cause bearish traders to pay fees every eight hours. The position encourages market makers and arbitrage desks to buy inverse swaps — or perpetual contracts — as they simultaneously offload their futures monthly contracts.
Analysts typically interpret negative funding rates as a buy indicator. they make
Many traders point to the potential in bitcoin’s ongoing consolidation move. Formation of a Bearish Pennant structure.
— blackbeard (@crypto_blkbeard) June 7, 2021
In retrospect, bearish signals are downside continuation indicators, that is, their setup usually involves the asset breaking out of range and continuing in the direction of its previous trend. For example, bitcoin fell from around $65,000 to $30,000 before making the pennant. So, based only on technical structures, it looks more likely to continue lower.
Meanwhile, a Bullish Backstop Forms for Bitcoin fear of rising inflation. This week, the US Bureau of Labor Statistics will release its May Consumer Price Index (CPI) report. The data will set the future tone for the Federal Reserve’s expansionary monetary policies, which include near-zero lending rates and infinite bond-buying programs.
Economists expect the CPI to rise to 4.7 per cent in May, from 4.2 per cent in April.
Bullish On-Chain Metrics
Dropped more evidence of investor intent to trade/liquid bitcoin than for other assets. For example, on-chain analytics firm Glassnode reported a decline in net exchange flows associated with bitcoin.
Meanwhile, its rival CryptoQuant highlighted a significant drop in volume in the bitcoin blockchain, hinting at a similar hodling approach via its “BTC: Active Address Count” metric.
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