The bear market trend that began in early February seems to be abating. This was apparent in March, when Bitfinex’s short positions stabilized at around 15%, but fell to 10.6% in April. The decline occurred despite the fact that, in the first quarter, Bitfinex’s share price remained largely unchanged, suggesting that short bets were being driven by news events. The decline came despite the fact that, in the first quarter, Bitfinex’s share price remained largely unchanged, suggesting that short bets were being driven by news events
It’s been a rocky few days for Bitcoin. The flagship cryptocurrency has slipped in and out of the red, and it’s nowhere near the $9,000 price level that has set the market alight in recent weeks. Bitfinex’s short margin contracts, which provide traders with a way to bet against the price of Bitcoin, have been blamed for the fall, amid fears of a regulatory clampdown. Shorting Bitcoin can be dangerous, however, as it can be a way for speculators to unload on the market before prices rise again. Bulls will like that shorting is a way to invest in Bitcoin, but bears will point out that there are risks involved.
Market sentiment has taken another beating as bears continue to batter Bitcoin, with the bitcoin-to-US dollar (BTC/USD) exchange rate slumped from $72.60 to $71.83 this morning. After climbing to a high of $83.06 on April 30, the market has been wracked by just about every conceivable negative, with the latest confirmation being a surge in short positions in the bitcoin margin (aka leverage) market on Bitfinex.. Read more about bear market crypto 2021 and let us know what you think.Bitcoin (BTC) followers should prepare for a potential bear rush, as the number of short margin positions on the Bitfinex exchange has risen by just over 378%. The dataset, known to most people as BTCUSD Shorts, tracks the number of bearish positions in the bitcoin market. It’s simple: Traders borrow money from Bitfinex – their broker – to trade bets on bearish outcomes for the BTC/USD instrument. At the same time, the value of open short positions is measured in BTC. The number of short margin positions on Bitfinex reached an intraday high of 6,468.2202 BTC on Monday, up more than 378% from the previous session’s low of 1,351.72 BTC. The rise has prompted some analysts to raise alarms about a possible bitcoin spot market collapse, especially since an equally wild uptrend in the BTCUSD curve led to a spike in BTC/USD on the 19th early last month. In May, the drop was nearly $13,000. For example, independent market researcher Fomocap posted a chart on Twitter that showed a remarkable correlation between the bitcoin spot price and short margin positions. The analyst pointed to two instances where the two indicators moved in opposite directions with some delay. His first example shows that BTCUSD went short on May 25. which then led to a price rise in the bitcoin spot markets. Bitcoin dipped 30% after BTCUSD short positions on Bitfinex jumped up. Source: TradingView.com. The second example shows that bitcoin spot prices fell after an increase in short positions in BTCUSD. EBlockChain, a contributor to TradingView.com, said Monday that BTCUSD short sales of more than 200% or more are a strong sign of an imminent reset in the bitcoin spot markets. The analyst added: It can be started up in a few hours [to] up to three days.
Long margin positions, meanwhile
The bold bearish statements on bitcoin have also come amid a steady increase in its margin positions. BTCUSD longs, another Bitfinex dataset that tracks the number of bullish margin positions, jumped to 44,538.6579 BTC on Monday. So it seems that long exposure to bitcoin has generally remained higher than short exposure, showing that for traders the direction of least risk is up. Bitcoin long positions on Bitfinex are high despite recent bearish position swings. Source: TradingView.com. However, a sudden drop in bitcoin spot prices could also force holders of leveraged long positions to reduce their BTCUSD positions, which in turn would trigger further selling. Such an event is called a long compression. For example, the price collapse of 19… May to liquidate about $7.5 billion of long positions in the cryptocurrency derivatives market. Jacob Canfield, a crypto currency trader, gave an optimistic view of bitcoin after its collapse in May. Last week, one analyst said that bitcoin had already fallen more than 40 percent since the long squeeze in May – and that it was now less likely that there would be another significant drop. After a long period of compression and liquidity comes a downward movement. Liquidity is generally increasing and short positions are locked in on the assumption that further declines are in the offing. We’re already 40% off. It was the Bears’ turn again. – Jacob Canfield (@JacobCanfield) 2. June 2021 Meanwhile, since the collapse of the 19. In May, the funding cost of long bitcoin derivative positions remained close to zero. Negative funding rate forces bearish traders to pay commission every eight hours. This situation encourages market makers and arbitrageurs to buy inverse swaps – or perpetual contracts – and get rid of their monthly futures contracts. BTC’s funding history. Source: Bybt.com. Analysts typically interpret negative financing rates as a buying indicator. You create
Poor technical performance
Bitcoin’s continued consolidation move has many traders looking forward to a possible bearish pennant structure forming. I don’t really like this structure. $BTC pic.twitter.com/yO8bG66Zzr – Blackbeard (@crypto_blkbeard) 7. June 2021 In retrospect, bearish flags are indicators of continued downward movement, i.e. their appearance usually indicates that the asset is moving out of range and further in the direction of the previous trend. Bitcoin, for example, dropped from around $65,000 to $30,000 before the pennant formed. Therefore, the likelihood of a further decline seems to be higher on the basis of the technical structures alone. Meanwhile, there is one bullish factor that continues to support bitcoin: concerns about rising inflation. This week, the U.S. Bureau of Labor Statistics will release the consumer price index (CPI) for May. This data will set the future tone for the Federal Reserve’s expansionary monetary policy, including near-zero interest rates and endless bond-buying programs. Economists had expected the consumer price index to rise to 4.7% in May from 4.2% in April.
Vee metric chain
There are new signs that investors are planning to hold bitcoins instead of trading/liquidating them for other assets. For example, analyst firm Glassnode reported a decline in net exchange flows with bitcoin. Net flows from bitcoin exchanges hit a 19-month low. Source: Glassnode Meanwhile, competitor CryptoQuant noted a significant drop in volume on the Bitcoin blockchain, suggesting a similar prediction from HODLING via its BTC: Active address counter Metric. The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.The overall market sentiment towards Bitcoin this week has improved, following a recent spike in the price of Bitcoin coupled with a sharp decline in the USDT price. The price of Bitcoin has seen a rapid rise over the past month, and has gained over $500 since our last Bitcoin price prediction. Despite the gains, Bitcoin still faces the risk of a major correction, due to the lack of growth in the major crypto markets, both mainstream and altcoin.. Read more about crypto bear market 2020 and let us know what you think.
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