The volume of short positions on bitcoin exchange Bitfinex in two days increased by 350% to 6,468 BTC. Bitfinex, unlike other exchanges, provides detailed statistics on long and short positions, and, as noted by the Fomocap analyst, their significant changes in the past often coincided with sharp market movements.
Bitfinex sudden move in shorts always means something. From Nov 25 drop to May 19 rise. It’s rising again. #Bitcoin https://t.co/MlcgcpFfN2 pic.twitter.com/O5a6OVr8tp
— Fomocap (@Workedia) June 7, 2021
So, on November 25, a large volume of short positions was closed, after which Bitcoin accelerated its ascent to new highs. On May 19, during a sharp decline in the market, short positions, on the contrary, were rapidly added to the market.
An analyst at EBlockChain says such an increase in short interest may serve as a “very strong indicator” of an impending dump, which he expects to occur within three days.
It is noteworthy that the volume of long positions has also increased in recent days, but not so much, and reached 45,000 BTC. As a result, the ratio of long interest to short interest in five days on Bitfinex fell from 58 to 1 to 7 to 1. Thus, the vast majority of traders’ capital is still placed in bullish positions, which risk being liquidated in the event of a rapid market decline.
Analyst Jacob Canfield believes that bullish traders have already taken a hard hit during the long squeeze in May, and admits that the next move of a similar plan could be heading up when it comes time to pay the bears. Funding rates from May 19 on the market as a whole remain negative, indicating the prevalence of borrowed capital on the side of the latter.
One of the analysts also draws attention to the formation of a bearish pennant after the May decline. Completion of the pattern will imply a continuation of the rollback. A bearish pennant is formed after a sharp decline, and its borders run along lower highs and high lows, as in this case. It is believed that the fall continues by approximately the same amount as before the pennant appeared.
Not a big fan of this structure. $ BTC pic.twitter.com/yO8bG66Zzr
— Blackbeard (@crypto_blkbeard) June 7, 2021
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