Bitcoin Traders Closing More Positions As Prices Range Above $60,000
May 09 2024 - 3:00PM
NEWSBTC
Bitcoin has been trending lower after failing to break above
$66,000 in early May, deflating hopes of immediate price gains
post-Halving. Taking to X, one analyst shared on-chain
data that paints a more nuanced picture than a simple loss of
confidence in recent weeks. Bitcoin Open Interest Remains
Low: Bullish? The analyst, pointing to CryptoQuant data, observes
that leveraged traders on perpetual trading platforms like Binance
appear to be closing their positions more than opening new ones.
The analyst notes that the reading is at -20% at the monthly change
in Open Interest. At this level, it shows that more traders
are closing more positions than opening new ones. This development
suggests that most traders adopt a strategic wait-and-see, watching
prices evolve. Related Reading: Bitcoin Whales Lose Interest, Is
This A Precursor For A Crash To $50,000? Despite the decrease in
positions opening, it’s important to note that this is not a sign
of BTC’s downfall or the invalidation of a potential
surge. The analyst interpreted this contraction as a strategic
move by traders, who are cautiously optimistic and not exiting the
market due to bearish expectations. In a separate post,
the analyst added that the Bitcoin market needs the current wave of
liquidation and “negativity” for accumulating short positions. All
short positions opened at spot levels bet that BTC will continue
trickling lower, even breaking below $56,500. However, the
more short positions there are, the higher the possibility of a
“short squeeze” forming. When this happens, there will be a sudden
price spike, liquidating shorts and forcing sellers to buy back
into the market to prevent further damage. BTC Inside A Trade
Range: Will $60,000 Fail? Despite the potential upside hinted by
on-chain data, prices remain confined within a narrow range. Last
week, bulls failed to close above $66,000, confirming the
impressive march from May 3. Bitcoin found resistance and is moving
lower toward the psychological $60,000 level. From price action,
losses below this line might fast-track the collapse toward $56,500
registered in early May. Going forward, traders will closely
monitor how prices evolve after the all-important Halving on April
20. Considering the approval of spot Bitcoin exchange-traded funds
(ETFs) and the involvement of institutions, some analysts expected
prices to shoot higher immediately. Related Reading: EU Watchdog
Considers Crypto Integration Into $12.88 Trillion Investment Market
Nonetheless, this has not been the case. Prices continue to hang
amid fluctuating inflows to spot ETFs, and the United States
Federal Reserve is still not slashing interest rates. Feature image
from Shutterstock, chart from TradingView
Quant (COIN:QNTUSD)
Historical Stock Chart
From May 2024 to Jun 2024
Quant (COIN:QNTUSD)
Historical Stock Chart
From Jun 2023 to Jun 2024