Crypto Traders’ Long-Term Bitcoin Short Contracts See Uptick in Closures Signaling the Bottom is In?
It seems that those who shorted Bitcoin when it was reaching its all-time high at $20,000 are cashing out now. Bitcoin has been traded between $3,250 and $4,100 during the last few months.
This comes just a few weeks after Mark Dow, a former International Monetary Fund (IMF) economist, cash out his short contract on Bitcoin in December. He said that he does not want to “ride this thing (Bitcoin) to zero.”
During the last year, Bitcoin experienced several short-time rallies. For example, in February 2018, Bitcoin reached almost $12,000, later in May it was traded close to $10,000. This could have been a good moment for these invesors to cash out their short contracts. Nevertheless, it seems that at $3,650 they seem ready to set aside the profits and have a look at the market.
Everybody rushed in to the market to buy $BTC above $15,000.
Everybody scared to buy $BTC now at $3,000, while the progress is steady and strong and the fundamentals are getting better.
The psychology of the market. It’s beautiful.
— Crypto Michaël (@CryptoMichNL) February 10, 2019
This could be very positive for Bitcoin that has been in this bear trend for 14 months, being the longest bear market ever registered by Bitcoin in its ten years. Although the bear trend could be close to an end, there are several individuals and experts that beleive that it could last even 24 months.
Eric Larchêveque, the CEO of Ledger, a hardware wallet manufacturing company, mentioned that the bear market could last 24 months.
In an interview with CCN, he commented:
“We thinkk we could have 12-24 more months of a bear market. Or some kind of nuclear winter in crypto- So we are just adapting the growth of the company to make sure we can withstand two years of bear market.”
Clearly, if Bitcoin is able to remain close to $3,000 without falling under that level, this could be a good moment to lock in profits and start an accumulation phase as soon as the bottom is established. The recovery in the cryptocurrency market could come later in 2019 due to several factors that would have a deep influence on Bitcoin’s price.
Bitcoin will be experiencing a halving in May 2020. The number of BTC received by miners will decrease 50% from 12.5 BTC to 6.25 BTC per block. This, and an increased demand for the digital asset could help it start a new bull run or a positive trend.
Additionally, the Bakkt platform will be launched during this year as well. The CEO of the Intercontinental Exchange (ICE), Jeffrey Sprecher, announced that they will be releasing the platform later this year.
It seems a good moment for those who were short to start cashing out their contracts and think what will happen the coming months.
At the time of writing this article, each Bitcoin can be purchased for $3,638 and it has a market capitalization of $63.81 billion.