The number of short Bitcoin ( $29,063.00 ) positions has surged on Bitfinex.
Such market behavior has coincided with downward price action in the past.
Further selling pressure could push BTC below $34,400, triggering a capitulation event.
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Bitcoin ( $29,063.00 ) has looked shaky for weeks, with many large investors favoring the downside. The increasing downward pressure could push BTC to break support and suffer a steep correction.
Bitcoin ( $29,063.00 ) Spells Trouble
Bitcoin ( $29,063.00 ) continues to trade sideways while large investors appear to be betting on an upcoming capitulation event.
Data from Datamish shows that there has been a significant increase in the number of short Bitcoin ( $29,063.00 ) positions taken out on Bitfinex. It appears that a group of large investors or institutions borrowed roughly 1,500 Bitcoin ( $29,063.00 ) worth $58.5 million from the Hong-Kong based cryptocurrency exchange with the expectation that prices will decrease in the near future.
A total of 4,982 Bitcoin ( $29,063.00 ) have been lent on the exchange, and most of the short positions are non-hedging at the time of writing.
The sudden spike in short positions comes as Bitcoin ( $29,063.00 ) faces consistent rejection from the 50-week moving average after weeks of testing the critical resistance barrier. Still, the top cryptocurrency appears to hold above a vital support area represented by the 100-week moving average at $34,400. A decisive close below this demand level could lead to a downturn for Bitcoin ( $29,063.00 ) .
Based on the weekly chart, a decisive candlestick close below the 100-week moving average at $34,400 could have the potential to ignite panic selling among market participants. If this were to happen, Bitcoin ( $29,063.00 ) would likely capitulate toward the 200-week moving average at around $20,000 to begin forming a market bottom.
The respected on-chain analyst Willy Woo has also said that he thinks that institutions and large holders have not stopped selling Bitcoin ( $29,063.00 ) . He stated that a price crash could be imminent given that Bitcoin ( $29,063.00 ) has historically endured capitulation events in previous bull markets. In a Mar. 10 Substack post, he wrote:
“There’s no question we are in a bear market due to the duration of the sell-off. There’s never been a bottom of a bear market in BTC without a capitulation event, so I think there is a high probability that this region breaks down, and we test lower lows before accumulation takes place to set up for the next bull cycle,” said Woo.
Bitcoin ( $29,063.00 ) is currently trading at around $38,850. It’s about 43.4% short of its all-time high.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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