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Bitcoin OTC Deals on the Rise; Suggesting Large Buyers are Entering the Market

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  • Bitcoin has been flashing signs of immense strength throughout the past few days and weeks, with buyers taking full control of its price action
  • Where it trends in the near-term will likely depend largely on whether or not the crypto can gain a stable footing within the lower-$17,000 region
  • If the selling pressure here proves to be too much for the crypto to handle, it could enter a consolidation phase and trade below this level for an extended period of time
  • One bullish trend indicating that Bitcoin is seeing massive inflows of capital is large over-the-counter trading volumes
  • This suggests that large buyers are pouring money into the benchmark digital asset at a rapid pace

Bitcoin has been caught in the throes of a wild uptrend throughout the past few days and weeks, with buyers fully controlling its price action as the cryptocurrency continues pushing higher.

The benchmark digital asset rocketed to highs of $17,250 this morning before slowing down and consolidating.

Bulls are now trying to gain enough momentum to spark further upside, as a rejection here could be dire for its near-term trend.

One analyst is noting that OTC deal flow volumes are painting a highly bullish picture for the crypto.

Bitcoin Pushes Past $17,000 as Bulls Take Control

At the time of writing, Bitcoin is trading up just under 3% at its current price of $17,170. This is around the price at which the crypto has been trading throughout the past few hours.

It appears to be facing some resistance just above its current price, but it remains unclear how long its current range-bound trading will last before it rockets higher.

If it can continue holding above $17,000, the crypto may see immense momentum in the near-term that sends it past its $20,000 highs set in 2017.

BTC’S OTC Volume a Bullish Sign

One analyst explained that he is observing high over-the-counter trading activities for Bitcoin, suggesting that large buyers are looking to acquire the crypto in large quantities off of exchanges.

“I think massive BTC OTC deals are still on-going. Tokens Transferred (not entity-adjusted) is increasing, indicating that big wallets are moving their funds. Fund Flow Ratio is decreasing, meaning that exchanges didn’t make these transactions.”

Image Courtesy of Ki Young Ju.

Where BTC trends in the days ahead should provide some serious insights into its mid-term outlook.

If OTC volumes are emblematic of “smart money’s” interest in the cryptocurrency, this trend could greatly favor bulls.

Featured image from Unsplash.
Charts from TradingView.



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Bitcoin

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

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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.