Bitcoin News: The current bear market has been pushing Bitcoin (BTC) towards the edge, the token has slid 10% in the last 24 hours dropping to its lowest level this year, around $3,200 as of writing. Reflecting on this downtrends, the number of open short trades for Bitcoin has reached an all-time high.
Over the past 24 hours, BitMex, the derivatives trading platform has taken the market away from the bears and given profits to the short traders, with over $3.1 billion in trading volume, dominating 31.8% of Bitcoin’s total trading volume.
The platform opened close to 40,000 shorts positions, reaching it all-time-high. Moreover, the number of contracts continues to increase as the price of Bitcoin falls. Short positions are the positions created by traders trying to hedge their risk with the decline of the top cryptocurrency, as the long positions are currently being exposed to negative price movement.
Bitcoin has been spiralling downward since it broke the $6000 level in November, reaching a new-yearly-low. This has lured the short investors, enabling them to leverage on the downwards movement of the coin. Herewithin the investor borrows a certain amount of the assets and sells them immediately. This is done to buy back the asset later to return the token back to the lender, hoping that the price continues to move downwards, the return is done after executing a profit.
The August 22 short squeeze caused as Bitmex exchange went down for scheduled maintenance, sent Bitcoin from $6250 to $6950. October 15, a massive short squeeze rocketed Bitcoin to $7000 again as Tether crashed.
Though investors might enjoy this game, it leads to Dominoes effect, as more and more shorts are getting closed, the buying orders are reaching higher, and more short positions are getting closed as well. Ultimately, the increase in short contracts raises the difficulty for Bitcoin as invested parties are looking for the price point to reduce further.
Noting that the market is crowded with whales who are ready to dump the coin at a moment’s notice, the potential for market manipulation in this fever pitch of the bear increases.