Bitcoin’s return failed to quell the bears’ hunger

the bitcoin And other cryptocurrencies are taking a breather after a stunning decline that lasted for several months. Now, after several days, the digital assets are back in Levels not seen since the collapse of crypto-asset platform FTX Two months ago, it caused a strong liquidation in the sector’s prices and scared the retail investor.

the Bitcoin price managed to reach the $21,000 level. The largest cryptocurrency has surged over the past few sessions, moving from below $17,500 last week to above $21,000. This higher-level rally marks a rebound after two months of moderate activity following FTX’s crash Sam Bankman Friedwith bitcoin reaching its lowest level in almost two years $15,500.

the Crypto asset traders are optimistic that the worst of the bear markets, which pulled Bitcoin from its all-time high in November 2021 near $69,000, may be over. However, some of that may be beyond the control of cryptocurrencies.

“The correlation between digital assets and stocks remains strong, with Bitcoin largely trailing the Dow Jones and S&P 500 over the past year amid a challenging macroeconomic backdrop of high inflation, rising interest rates and recessionary risks,” says Atlantic Capital. “This association is expected to continue.“, Add.

at least in the short term, Technical analysis of the crypto ecosystem suggests that Bitcoin has some supportAlthough the rally may not be worth pursuing at this point. “Near-term deep buy readings are challenging positive momentum, so we wouldn’t chase higher at these levels,” he says. Katie StocktonManaging Partner of Technical Analysis Group Fairlead Strategies.

“yes Bitcoin is able to stay above its 200-period moving averageAt around $20,000, the next hurdle will be at $21,500, according to Stockton, adding that the benchmark cryptocurrency now has a major support in the 50-session moving average price around $17,000.

“increase in The appetite for risk has caused Bitcoin to surgewhich spent the last weeks of last year languishing between $16,000 and $17,000… It’s up more than 25% since the turn of the year, passing $20,000,” he describes. Craig Erlambroker analyst Oanda.

“It is not clear if that is the caseIt is a sign that you are hitting rock bottom and are suffering Only a short rebound or rally, but clearly there are still some very bullish traders. It should be a fun few weeks, “says the expert.

Big short positions

The violent move higher caused pain for traders who were shorting or going long against Bitcoin. We are Operations are carried out on the futures market of said cryptocurrencyIt is the most liquid of all cryptocurrencies. Traders often sell margin, or borrow money, and brokers can forcefully close your position if the market moves against you in a process known as liquidation.

Since January 11, When Bitcoin was trading below $17,500More than $355 million in bitcoin short positions have been liquidated, according to crypto data firm Coinglass. Across the crypto landscape, $1.1 billion in sell-offs cleared over the same period, according to the same company.

However, there are still more people shorting bitcoin than betting bullish. On the five days between 11th and 15th January, When bitcoin rose 20%, there were more “long” bets on bitcoin than “short” bets. According to Coinglass data, which supports a significant bullish trend. However, by Monday, that trend had reversed, as more than 50% of all futures positions in the digital asset were short Bitcoin.

“It could be a sign of more pain that will come for the bears if bitcoin continues higher. Or it could be an indication that the market thinks there is enough momentum at the moment and that prices may trim the gains slightly,” Irlam agrees.