Short Position Piling Up, Could This Hint At The Next Bitcoin Move?
June 07 2022 - 01:00PM
NEWSBTC
Bitcoin is still unable to break above or below its current range.
Yesterday, BTC’s price was seeing a trading session in the green
until a surge in negative news contributed to an increase in
selling pressure. Related Reading | New Study Shows 37% Of
People Want Governments To Legalize Bitcoin Traditional markets
also tumbled and added to the downside price action as Bitcoin
approached a major area of resistance at $32,000. At the time of
writing, Bitcoin (BTC) trades at $29,800 with a 6% loss in the last
24-hours. Trading desk QCP Capital published a market update
highlighting the rise in Bitcoin dominance as altcoins, such as
Ethereum, continue to underperform. This metric is used to measure
the percentage of the total crypto market capitalization comprised
of BTC alone and currently stands at 47%. As seen below, the last
time this metric was at its current levels was in November 2021
when the market took a final move to the upside before a major
crash on December 3 that year. After that, Bitcoin dominance
trended to the downside and moved sideways until mid-May 2022. If
the upside trend in Bitcoin dominance continues, the altcoin market
could experience more pain as BTC’s price remains rangebound.
However, the short-term seems ready for some relief. QCP Capital
noted an increase in the number of short positions across the
market. The trading desk said the following in its report: If this
an indication of overall market positioning (i.e. market is
directionally short), spot prices might have formed a base here and
we could see more spot upside in the short-term. In a separate
report, QCP Capital also noted BTC and the crypto market’s capacity
to remain “robust” despite the “massive wipe-out” and general
selling across the global market. The firm believes this is a “mark
of maturity for crypto as a trading and investment asset class”.
Bitcoin In The Short Term, The Road To $34K In the same report, the
trading desk highlighted what could be the biggest headwind for
Bitcoin and the crypto market in 2022. The nascent asset class saw
unprecedented growth from 2019 to 2021 on the back of the U.S.
expanding its money supply. As QCP Capital said, the U.S. money
supply has gone from expanding to contracting. As the chart below
shows, the U.S. money supply recorded its firm monthly contraction
since 2011 and hints at more pain for Bitcoin and other risk-on
assets. The trading desk added: This draining of liquidity will
only be exacerbated by the upcoming QT balance sheet unwind as
well, beginning 1 June. We expect these factors to weigh on crypto
prices. Related Reading | Bitcoin Market Cap Shed Over $120-B
Last Month – How Much More Can It Lose? On the short-term horizon
for Bitcoin, a pseudonym trader believes there are good conditions
for a rally to $34,000. The number one crypto by market cap is
signaling oversold on certain metrics and was able to maintain to
remain rangebound on key indicators. #Bitcoin– OBV still chopping,
good sign we didn't break the chop. Just a little correction to an
over inflated pump. #Stock futures caused the sell off, and they'll
save it. pic.twitter.com/1tBbs6Qrkc — IncomeSharks (@IncomeSharks)
June 7, 2022
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