Bitcoin [BTC] finally broke away from its sideways trend as it recorded lows at $7295. The apprehension of a massive movement had grown increasingly uncertain as long/short orders reached parity on Okex.
The trading volume across the entire crypto markets had been low in the past couple of days. However, the Libra Hearing caused enough stir in the crypto markets once again. While the price dropped, the volume of trading increased many folds. Even Bakkt recorded its ATH trading volume of Bitcoin contracts.
Short Sellers Book Profit, but is Price Out of Woods yet?
Perpetual swap and futures market on Okex witnessed panic among traders as the market grew increasingly bearish. A large number of orders were closed as the open interest on these contracts shrunk by about 10%. BitMEX also recorded a massive long liquidation of about $200 million.
Therefore, the temporary increase in trading volume seems to be a panic reaction to the price drop.
Bitcoin [BTC] basis on Okex flipped on the negative side, indicating a higher degree of short selling than on the spot exchange. The difference in the price of the options market and spot market is still above negative $8.
Nevertheless, the overall BTC long to short ratio has increased from 1.17 to 1.54. The long interest among top traders on Okex has also increased to 60%. This is can be attributed to the price holding $7400.
The drop in the BTC Basis vs. an increase in long interest indicates contradictory bullish and bearish views. Therefore, it could indicate a settlement of the short orders at a profit. Hence, the actual long interest seems to have reached a critical stance. If the market continues down-trend, the short-selling will likely accelerate again.
The current price level of Bitcoin [BTC] around $7400 is the “last stance of the bulls” according to crypto-trader and analyst, Zoran Kole. He tweeted,
If we are in a $ bull market, the bottom is now in. #
Do you think that Bitcoin will bounce back to $8000 levels or continue its down-trend? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com