Bitcoin shorts reached an all-time high today: Is that a good thing or a bad thing for the price of Bitcoin?
The battle of Bitcoin bulls vs bears continues… Chart below via @CryptoRampage:
$BTC shorts made a new ATH today.
This is the rocket fuel we’ll use for a bounce. pic.twitter.com/krhQS3BwhP
— Rampage [Killmex] (@CryptoRampage) April 1, 2018
Short Squeeze Please?
Are you a Bitcoin bull or a contrarian investor? If so, then you’re looking at the ATH short interest on Bitcoin as a bullish indicator. Why?
Because short sellers are margin traders and they will be required to put up more capital or be liquidated if Bitcoin goes significantly higher against their short position. Imagine the BOOM in Bitcoin’s price when the ATH shorts go rushing to exit their positions. That’s a LOT of buying.
Do YOU feel that Bitcoin is already at its low?
To buy Bitcoin now in hopes of a short squeeze assumes that Bitcoin is already at its low and will move up. To me, it doesn’t make sense to buy weakness.
One thing I learned in Escrima is “Never try to catch a falling knife.” With the chance that Bitcoin could fall significantly lower, why take the risk with your capital? Be patient, and wait for a confirmed uptrend.
A short squeeze needs a catalyst, and I just don’t see one right now with weakness also found in the stock market combined with escalating geopolitical tensions.
If you think there’s more room for Bitcoin to fall, then the loading of shorts is certainly a confirmation of your view.
But let’s say we DO get a huge short squeeze, and that the contrarian investors are correct. The pain for Bitcoin holders is real… I believe any spike we see in the price of Bitcoin will be quickly sold be those looking to save a few hundred bucks on their losses, and that weakness will continue.
Thanks for reading!