Connect with us

Bitcoin

Here’s How the U.S. Dollar’s Macro Bearishness Could Send Bitcoin Flying

Published

on



  • Bitcoin is currently consolidating following its sharp decline seen yesterday
  • The cryptocurrency is lacking momentum as its bulls and bears both seem to reach an impasse, which has struck a blow to its technical outlook
  • One of the main reasons why BTC saw such a harsh rejection at $13,800 was due to a sudden surge in the US Dollar’s value seen yesterday
  • This sent shockwaves throughout the market and stopped BTC from breaking the resistance it was consolidating against
  • One analyst is noting that Bitcoin’s persistent inverse correlation to the USD’s value is a positive thing because it is expressing signs of immense macro weakness

Bitcoin and the aggregated crypto market are struggling to gain any momentum at the moment, with yesterday’s selloff striking a serious blow to the uptrend seen throughout the past few days and weeks.

Buyers have ardently defended against a sustained break below $13,000, with each decline to this level being met with significant buying pressure.

One factor that could help send BTC higher in the near-term is its inverse correlation with the US Dollar.

Although this may have been part of the reason why it saw such a harsh decline from $13,800, the fiat currency’s macro weakness could act as rocket fuel for Bitcoin – according to one analyst.

Bitcoin Consolidates as Bulls Try to Absorb Selling Pressure

At the time of writing, Bitcoin is trading down just over 1% at its current price o $13,130. This is around the price at which it has been trading throughout the past day.

Each attempt by bears to push it below $13,000 has been met with serious buying pressure, showing that bulls are still vying for control over its short-term trend.

Where it trends next may depend somewhat on the US Dollar Currency Index (DXY) – as its mounting volatility is beginning to influence Bitcoin.

Analyst: USD’s Value Could Soon Send BTC Rocketing Higher 

While sharing his thoughts on where the market might trend in the near-term, one analyst offered an optimistic outlook.

He points to a weak technical structure seen by the DXY, noting that this could bolster Bitcoin.

“I think the dxy is still macro bearish and anyone saying otherwise is tripping balls. Imo we go sideways and consolidate before taking out the 91 and making new lows. In the big scheme of things this is good for btc, however we will have dips along the way,” he said.

Image Courtesy of @SmartContracter. Source: DXY on TradingView.

How Bitcoin trends in the coming few days may depend on whether bulls can gain an edge over bears, but the DXY may largely determine its macro trend.

Featured image from Unsplash.
Charts from TradingView.





Source link

Bitcoin

Bad call? Bitfinex bears closed a block of Bitcoin shorts before the drop below $32K

Published

on

By


Bitcoin price is still in a rut, trading near $33,000 and trapped in a downtrend that just seems to get worse with the passing of each day. As the price slumps, analysts have consulted with several technical and on-chain metrics to explain the price collapse, but none of these have picked up on the exact reason. 

One area of interest has been the sharp rise in short positions at Bitfinex in the past week. Traders are placing exaggerated importance on these Bitcoin (BTC) margin shorts as if they are predictors of the current market crash. Still, as Cointelegraph previously reported, analysts forget that Bitcoin margin longs are usually much larger.

On June 18, longs outnumbered Bitfinex shorts by at least 22,800 BTC, but 87% of the short positions were closed before June 22. Currently, margin longs are 43,850 BTC higher than the amount shorted.

While those shorts are usually savvy traders, it is unlikely that they knew in advance that Chinese banks would prevent their clients from engaging in activities involving crypto trading or mining.

More importantly, these bearish positions were built while MicroStrategy was buying $500 million in Bitcoin after a successful senior secured note private offer. To make things worse, Michael Saylor’s business intelligence firm announced the intention to raise another $1 billion by selling stocks to buy Bitcoin.

Let’s take a look at how these courageous shorts fared.

Bitfinex margin shorts (blue) vs. Bitcoin price in USD (orange). Source: TradingView

On June 6, shorts increased from 1,380 to 6,700 at an average price of $36,150. Three days later, another 12,180 shorts were added when Bitcoin was trading at $37,050. Lastly, between June 14 and 15, shorts increased 6,000 to a 25,000 peak while Bitcoin averaged $40,100.

By looking at the Bitcoin prices when those short position increases took place, it is reasonable to assume that the 23,500 contract increase (green circles) had an average price of $37,625.

Related: Traders search for bearish signals after Bitcoin futures enter backwardation

Traders closed positions before BTC crashed bel$32,000

These short positions were steadily closed over the past three days when Bitcoin was already trading below $37,000. However, 17,000 short contracts had already been closed by the time the price plunged below $33,500. Therefore, it is implausible that the average price was below $34,500.

No one would complain about gaining 8%, shorting the market to generate a $73 million profit. However, it is essential to note that on June 16, when Bitcoin reached $40,400, these shorts were underwater by $65 million.

This analysis shows how even highly professional traders can go deep underwater. There’s no way to know if this trade would have been profitable had the crackdown on China not aggravated Bitcoin price or if MicroStrategy managed to raise the $1 billion before the price drop.

If anyone still believes in market manipulation, at least there’s comfort in knowing that pro traders can face drastic losses as well. However, unlike us mortals, whales have deep pockets and patience to withhold even the most rigorous thunderstorms.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.