One can visualize the pain and carnage of the traders that were short Bitcoin going into this move. While neither the amount of short interest nor the percentages long/short were at record levels they were definitely high and had been increasing steadily since the dump in March. If anything it was a great reason to be contrarian as the shorts steadily increased over the last month.
Even though I would normally like to take a short off a 50% price retracement my rules and conditions were not met for a trade. Nor were they met for a margin long. I must be content with the 1x move.
I also took the time this morning to check the arbitrage between the spot BTCUSD and futures markets. The highest futures premium for the September 2020 futures was only 0.4%. That tells me that there is not a tremendous amount of bullish optimism within this move. When we were at this same price level in mid January the upside premium was over 4%.
The futures premium being low and the apparent liquidation of short interest tells me that this move was more of a 'short squeeze' of traders trying to play that 50% retracement as a resistance closing or being force closed (most likely) their positions.
Very clear!
Thanks for sharing, seems like BTC price can decrease just when the short pressure is low-medium to low. Whales are going to counter move if short pressure is high, and use that short squeeze snowball to profit.
That was a harsh lesson, but I've learned =)
norok
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@byte-too-much, The short interest or long interest can definitely show where the PAIN will be felt... and greatest risk-to-reward if your trade stands to benefit!
Thanks for sharing, seems like BTC price can decrease just when the short pressure is low-medium to low. Whales are going to counter move if short pressure is high, and use that short squeeze snowball to profit.
That was a harsh lesson, but I've learned =)