#Bitcoin Shorts Reach All-Time Highs During Low Market Cycle, What’s Next?

September 3, 2018

 

Bitcoin short positions have been ranging near their all-time highs during the past month, signaling that traders are giving up hope that Bitcoin will maintain its current price of over $7,200. On September 1st, a notable 10,000 BTC short position was opened, bringing Bitcoin short positions back near their all-time high as Bitcoin shows relative stability in the low $7,000s. Bitcoin shorts first reached their highest year-to-date position on April 9th, while Bitcoin was trading at approximately $7,000. At this point, short positions reached a year-to-date high of just over 38,000 open positions, which had slowly been growing from early February. In the month following short positions reaching this new high, BTC price climbed from $7,100 on April 9th, to just under $10,000 on May 5th.Although this example of correlation between a large quantity of open short positions and a preceding price climb in Bitcoin is inconclusive, the same price reaction occurred in early August, when short positions climbed from 17,000 open positions on August 2nd to just under 40,000 open positions on August 21st. The over 2x increase in open BTC shorts corresponded with BTC falling from over $8,000 in late July, to just over $6,000 on August 13th, which drove many alt-coins to their year-to-date lows, crushing market sentiment.Just after open short positions peaked at nearly 40,000, they crashed to approximately 22,000, which coincided with Bitcoin’s price rise from $6,000 to over $7,000 which occurred during a similar time range.

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