Although Bitcoin finally managed to rise to $7,200 on September 1, it doesn’t relate the full batch of crypto enthusiasts. A relatively large portion took a negative stance regarding the short-term performance of the Bitcoin price. This reaction can be attributed to the piling up of short contracts on Bitcoin on BitMEX and Bitfinex, on September 2. The remaining supports indeed points out that Bitcoin’s relative stability in the bear market is rather a positive sign.
A well-recognized trader in the cryptocurrency community, Squeeze, disclosed earlier that in an extremely short period of time Bitcoin shorts have risen to previously unseen levels. Squeeze said:
“This is the first time in my 5 years of trading Bitcoin that I’ve seen an increase of almost 10,000 BTC of shorts in less than 3 hours on Bitfinex.”
It could have been just one big retail trader, who in the past few hours have piled on thousands of Bitcoin worth of short contracts. Essentially creating a domino effect as it triggered the rest of the market. The short contract and Bitcoin are not inversely proportional, so it the former’s rise does not necessitate the latter’s price drop. In likelihood, the value is expected to increase in the next 12 to 24 hours and then all of the short contracts will be liquidated, purchasing Bitcoin.
Bitcoin currently shows a decent movement in the $7,200 region. According to some investor, the market will either experience a sharp drop below $7000 mark or rise that will break $7500. As a result, many traders are avoiding trading tokens that have high-risk high-return traders, especially as Bitcoin is behaving volatile.
In the past 24 hours, The native cryptocurrency of Ethereum, EOS, Litecoin, NEO, and Ontology, Ether has experiences relatively large losses against both Bitcoin and the US dollar. The unpredictability has now led traders to hedge their holdings towards the USD-backed stablecoins like Tether (USDT)
Though the volume of Tether remains above the $3 billion mark, it still lacks in relation to the volume of major cryptocurrencies, Bitcoin and Ethereum above $4.4 billion and $1.4 billion respectively.
The Market condition
The uncertainty in the market is leading altcoins like ICON, Ontology, Aelf, WaltonChain, and 0x to bleed. Since small market cap cryptocurrencies are always first to fall even in a slight downtrend, the movement of tokens on September 2 was expected.
In the next 12 hours, the Bitcoin price is not likely to dip below the $7,000 level and if it doesn’t, a short squeeze may intensify its movement on the upside. The market still needs to see more from major cryptocurrencies to confirm either a reverse in trend or establishment of new momentum.