The dataset fell to 11,066 BTC at 12:20 GMT on Saturday, from 14,897 BTC at the opening of the session. Meanwhile, the decline came as part of a larger downward movement that began on July 15. On that day, the total number of short positions with margin had reached 17,053 BTC.
Simply put, BTCUSDSHORTS represents the number of bearish positions with margin on Bitfinex, measured in BTC. Traders borrow funds from Bitfinex – their broker – to bet on bearish outcomes for the BTC / USD instrument. That said, the latest data shows that traders have reduced their leveraged bearish exposure to the Bitcoin market.
Bitcoin peak expected?
Popular trader Scott Melker has claimed that every massive drop in BTCUSDSHORTS positions on Bitfinex leads to an increase in Bitcoin spot prices, adding that he will be watching the market for a similar bullish reaction.
The Bitfinex whale may be starting to relax. Every time they go down, the price has gone up. go look. pic.twitter.com/5F40LYjMVL
– The wolf of all streets (@scottmelker) July 16, 2021
A closer look at the BTCUSD-BTCUSDSHORTS correlation showed an erratic positive correlation. Bitfinex’s short positions opted for a Bear Run after December 2020, a period that coincided with a peak in the Bitcoin spot and derivatives markets.
In April-May, a decline in Bitfinex’s short positions coincided with the price of Bitcoin falling from less than $ 45,000 to a record high of $ 65,000.
Nonetheless, similar BTCUSDSHORTS crashes in June – at best – kept Bitcoin above a psychological support level of $ 30,000, if not pumped it out outright.
The downward pressure on Bitcoin continues despite a recent drop in BTCUSDShorts, as Grayscale Investments releases 16,000 BTC from its Grayscale Bitcoin Trust (GBTC) shares on July 18, after a six-month lock-in period.
JPMorgan & Chase strategists led by Nikolaos Panigirtzoglou warned in June that the massive Grayscale unlock event could become the source of the next wave of selling in the Bitcoin market.
Channel analyst Willy Woo echoed similar concerns last week, explaining that when the GBTC premium drops relative to Bitcoin units held in Grayscale reserves, it tends to distract investors from the spot markets.
“Investors now have a greater incentive to buy GBTC stocks rather than BTC, this diverts some of the buying pressure in the spot markets from BTC,” Woo said. “It’s bearish. “
(1) is sudden and directly impacting while (2) acts very slowly. So it’s an uptrend.
The overall impact over the long term is neutral because it is any trade-off that balances out over time. What we are analyzing are short-term demand / supply imbalances that can impact prices.
– Willy Woo (@woonomic) July 6, 2021
Bitcoin holds $ 31,000
While a bullish BTCUSDSHORTS drop offsets a pessimistic GBTC unlock event, the BTC / USD spot exchange rate holds $ 31,000 as provisional support.
BTC / USD repeatedly tested the $ 30,000- $ 31,000 range for support before rebounding higher. A maximum of its retracement was able to break through the resistance level of $ 35,000. Nonetheless, the sense of profit taking pushed the pair back towards $ 30,000.
As a result, bearish sentiment for Bitcoin among analysts is extremely high, below $ 30,000. For example, pseudonymous chartist Fomocap sees BTC / USD crashing to $ 20,000 if the pair closes below $ 30,000.
Weekly. Price is rejected from 39k. Then 35k. Cont to press with higher pressure. Below the median canal. Going below 30k definitely comes from the 20k support. This is how gravity works. But still holds until now .. #Bitcoin pic.twitter.com/2qpKWGL4cF
– Fomocap (@Workedia) July 16, 2021
NebraskanGooner also expects a ‘nuke’ type scenario for Bitcoin if it drops below $ 30,000.
Everyone is talking about a level of $ 30,000.
As for, it is the support that must be held to avoid a nuclear bomb. pic.twitter.com/t4Vv2msdAw
– Nebraskangooner (@nebraskangooner) July 14, 2021
The formation of a potential reverse cup and handle formation also sees Bitcoin falling below $ 20,000 on the next breakdown below the $ 30,000- $ 31,000 range, as seen in the chart below. .
Woo relied on the chain’s fundamentals to predict a bullish outcome. The analyst said smart silver has stopped selling as long-term investors absorbed Bitcoin at record highs, just as the price flirts with $ 30,000 support.
“The coins are moving away from speculators to become long-term investors (strong hands) now at an unprecedented rate since February, when the price rose from $ 30,000 to $ 56,000,” he wrote in his recent note to clients, adding:
“I expect price to break out of its bearish sideband over the coming week, followed by a rally in the $ 50,000- $ 60,000 area before further consolidation. “
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move comes with risk, you should do your own research before making a decision.