Traders Prepare For a Big Bitcoin Drop as Shorts Stack 50%

Tony "The Bull" Severino

Last Updated: December 16, 2019 5:00 pm

3 mins read

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Crypto traders are preparing for the next big move in Bitcoin, as short positions have stacked up by an additional 50% over the last 24 hours.

Is the first-ever cryptocurrency about to experience yet another fall, or will these fresh short positions be squeezed in a strong push upward into a rally?

Shorts Stack Ahead of Big Expected Bitcoin Drop

The talk of the cryptocurrency market over the last couple of weeks has been the growing spike in long positions on the crypto exchange Bitfinex, nearing the highest levels the metric had ever seen.

But over the last 24 hours, shorts on the popular crypto platform have also spiked, by as much as 50% in just one day.

Oftentimes, when the market begins to fall, short positions pile up in anticipation of a further move lower, but those late to take a short trade end up getting squeezed in a strong push higher. As the price of Bitcoin rises, short trade stop losses are triggered, or short traders begin to manually cover and close positions to avoid further losses, causing a cascading effect in price movement.

The resulting spike is called a short squeeze, and due to the recent surge in short positions, the chance of such a contrarian move becomes more and more likely.

Bitfinex Longs Reach All-Time High in BTC At Stake

However, the recent surge in shorts could be a contrarian strategy itself. The ratio between long and short positions on the crypto platform greatly lean in favor of longs, even with the recent surge in shorts causing the ratio to come closer to parity.

What a…
Bitcoin Longs to Shorts Ratio (Bitfinex)$BTC $BTCUSD #bitcoin pic.twitter.com/lt1NYoWZ3H

— CryptoHamster (@CryptoHamsterIO) December 16, 2019

Long trade positions taken in Bitcoin, however, are at the highest level they have ever been at, in terms of overall BTC put at stake.

Speculation suggests that the longs are the result of a lone whale taking a massive position ahead of Bitcoin’s hard-coded halving, which is expected to cause the price of the first-ever crypto asset to rise significantly as the delicate balance of supply and demand is thrown off.

Regardless of the direction of the next move, it’s clear that traders are expecting a big move in Bitcoin soon, and are taking positions in advance of what they expect to be a trend-defining movement, at least in the short-term.

If Bitcoin price rises from here, it will need to reclaim resistance as support at $8,000 to get the market bullish once again, or the crypto asset is at risk of falling lower toward $6,000, or potentially even lower back into a bear market.

Featured image from Shutterstock

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.