Bitcoin has been caught within an unrelenting bout of sideways trading within the $7,000 region in the time since it bounced from lows of $6,500 in late-November. This consolidation period has made it increasingly unclear as to where BTC will go next.
One potential factor that could provide some insight into what type of movement is coming next is the fact that Bitcoin’s long positions have been skyrocketing, which may actually spell trouble for BTC’s bulls in the near-term.
Bitcoin Continues Inching Lower as Bears Build Strength
At the time of writing, Bitcoin is trading down over 3% at its of $7,285, which marks a notable decline from its daily highs of over $7,600 that were set in sharp and fleeting movement yesterday.
BTC’s rejection at this level signals that sellers currently have firm control of the upper-$7,000 region, and it currently remains unclear as to whether or not buyers will be able to defend the support levels that have been established around $7,000.
One factor that should be closely watched in the near-term is the massive increase in BTC long positions, which could be a bearish sign, as these longs could help fuel a “long squeeze” that perpetuates a massive downwards movement. Zack Voell, a popular figure within the cryptocurrency markets, pointed out the sudden rise in long positions in a recent tweet, saying:“Someone is longing the hell out of bitcoin.”
Someone is longing the hell out of bitcoin. — Zack Voell (@zackvoell)While looking at the chart that Voell referenced above, it is clear that there is an inverse correlation between long/short positions and price movements, as long positions dived to multi-year lows in March of 2019 when BTC was trading at yearly lows in the $3,000 region, just before it began a massive rally up to $13,800.
Why is BTC Stuck in a Bout of Sideways Trading?
Although extended periods of sideways trading can come about as a result of accumulation, Cantering Clark, a popular cryptocurrency analyst on Twitter, explained in a recent tweet that this current consolidation period is simple a “weak attempt to reclaim an important level.”
“No major break, nothing changed. Narrative starts when direction is less certain. This isn’t accumulation, it’s a weak attempt to reclaim an important level. Further down we go,” he bearishly explained.//twitter.com/CanteringClark/status/03229190 This extended period of Bitcoin trading within the $7,000 region may soon come to an end, as the unprecedented rise in long positions may provide significant fuel to sellers. Featured image from Shutterstock.
