Trader closes $34 million Bitcoin short position following reversal signal
The amount of Bitcoin short positions on cryptocurrency exchange Bitfinex fell by 20% this morning.
There was nearly 23,000 Bitcoin being held in short positions overnight, but this dwindled dramatically this morning following a 6,500 Bitcoin short order being closed.
Usually a move of this magnitude would move the Bitcoin price to the upside, but the
cryptocurrency stalwart has remained below the $5,350 level of resistance.
The lack of price action could be attributed to a hidden sell order being placed, which would mean that in spite of the $34 million short position closing, price would remain pegged to the hidden order.
The amount of long positions on Bitfinex did increase from 23,800 to 26,000, which could suggest that a trader flipped their short position to long as a result of the ongoing market rally.
The amount of short positions on Bitfinex is now at its lowest point since March 2018, when optimism of a bullish reversal was still relatively high.
But now, 15 months after the bull market officially ended, a reversal seems to be in sight after Bitcoin’s weekly candle closed above the 200 exponential moving average (EMA) on the daily chart for the first time since July’s $8,400 top.
The amount of volume during last week’s rally broke the previous all-time high, with $87 billion being traded in the cryptocurrency markets within a 24-hour period.
The fact that Bitcoin’s weekly candle closed above the $5,150 level of resistance was critical, with many suggesting that a retest of the broken support trendline at $5,900 will be the next level to take out after $5,350 falls to the bullish sentiment.
The $5,900 level was used as support six times during this bear market, with price eventually falling in November as Bitcoin hit new yearly lows.
As it was such a staunch level of support, it will act as a similarly difficult level of resistance if price continues to move to the upside.