Minimal Long & Short Interest May Send Bitcoin (BTC) Plummeting, Warns Crypto Researcher
Lack Of Speculation May Precede Bitcoin (BTC) Drop
Over recent weeks, there’s been an odd dichotomy between Bitcoin (BTC) bulls and bears. Optimists have claimed that as the cryptocurrency remains above key support levels, as volumes surge, a breakout is inbound. Conversely, short-term cynics have argued that lower lows are inbound.
Crypto researcher Willy Woo, known for his cautious optimism, recently claimed that if BTC is to follow its historical trends, a drastic drop could be inbound. Backing his point, Woo cited the amount of open long and short interest on Bitfinex’s Bitcoin contracts, and how the market has previously reacted to movements in this figure.
The last time the market was more indecisive was at the start of 2018. Zones of minimal Long + Short positioning have historically coincided with bearish price action during bear markets (opposite is true for bull markets). When undecided, "the trend is your friend" prevails. pic.twitter.com/xwAkXrqKI3
He explained that last time the market was this indecisive, shown by the lack of speculation via futures interest, BTC fell dramatically. The same could be said about previous periods of low futures volume, which were seen in January 2018, April 2018, August 2018, and prior to the collapse in cryptocurrencies on the eve of the Bitcoin Cash hard fork. Woo elaborated, writing:
“Zones of minimal Long + Short positioning have historically coincided with bearish price action during bear markets. When [the market is] undecided, the ‘trend is your friend’ prevails.”
While the respected Australian commentator didn’t make any explicit price predictions, only explaining he is leaning to the theory that this market currently has a propensity to fall lower, BTC mirroring its previous price action would bring it to lower lows.
If Lower Lows Are Inbound, Where Will Crypto Fall To?
Doing some napkin math, weighing this cycle’s previous rapid sell-offs, Bitcoin falling from here could see the asset fall 25% at the minimum. If it comes to fruition, such a move would bring the flagship cryptocurrency to just under $3,000, a tad below its December 14th low of $3,150.
But some are convinced that BTC will fall even lower. In fact, sub-$2,000 forecasts have been floated from time to time. Financial Survivalism, an up-and-coming analyst centered around Bitcoin, recently took to Twitter to issue a harrowing comment. He noted that the longer BTC fails to surmount a long-term declining trendline at ~$4,600, the higher likelihood that the cryptocurrency’s price could “mirror the price action from September 20th to November 25th of last year.”
Per the analyst, this would mean that BTC could trade flat for another two to three months, before falling dramatically to the $800 price point. This, of course, is a worst-case scenario, but Survivalism does allude to a good point about market cycles and behavioral finance.
On a separate occasion, Survivalism took a public wager that the flagship crypto could hit $1,165 before $10,200, as reported by us previously.
Others have been lest abrash with their calls, but have still claimed that BTC going sub-$2,000 wouldn’t be too nonsensical. Murad Mahmudov, for instance, has made the case over the past several months that historical price action, combined with fundamentals, signals that there is further to fall.
Title Image Courtesy of Andre Francois Mckenzie Via Unsplash