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BTC Faces Selling Pressure From Bitcoin Traders, But Not All Is Lost

source-logo  u.today 21 September 2023 15:10, UTC

Onchain analytics firm Santiment observes that Bitcoin traders are aggressively shorting BTC on Deribit and Binance. The silver lining to this scenario is that potential liquidations are more likely to raise prices. Santiment believes that as traders continue to bet against Bitcoin's price, a rebound to $30,000 is becoming increasingly likely.

📊 #Bitcoin traders are aggressively shorting on both #Deribit and #Binance, making potential liquidations more likely to boost prices. $BTC's price is +4% since the increase in shorting began to appear last week. This has a good probability of continuing. https://t.co/c8eTpAxIoP pic.twitter.com/8REpjp2rtx

— Santiment (@santimentfeed) September 20, 2023

The probable liquidation of excessive shorts might lead to a short squeeze, which occurs when many traders bet against a cryptocurrency asset and its price rises instead.

This phenomenon has contributed to recent Bitcoin price increases. Santiment stated that Bitcoin had gained about 4% since the spike in shorting began last week. It went on to say that this trend has a good possibility of continuing.

BTC was down 1.70% in the last 24 hours to $26,766 at the time of writing. The decline in cryptocurrency markets follows the latest Fed interest rate decision on Wednesday.

The Fed kept interest rates constant but left the door open for further increases. Following that, the S&P 500 dropped to four-week lows.

As Bitcoin strives to surpass the $27,500 barrier, crypto analyst Ali points to an intriguing trend that has influenced the BTC price in recent months. He notices that since mid-April, whenever the RSI on the 4-hour chart reaches 73.31, the price of BTC has retraced.

According to him, this is happening again as BTC approaches a declining resistance trendline at $27,440. Ali adds that a further downturn might take BTC to $25,200 or lower, creating a potential 'buy the dip' opportunity.

Traders, on the other hand, should keep an eye out for a 4-hour candlestick close above $27,440, as this might signify the commencement of a bull run.

Meanwhile, on-chain Bitcoin activity is much greater than it has been since April.

According to Checkmate, a Glassnode onchain analyst, the Bitcoin mempool has not cleared since mid-April. This surge in blockspace demand is somewhat unusual, with high activity indications but cyclically low transfer volumes. According to the Glassnode analyst, inscriptions may have led to mempool congestion.