Cryptocurrency investors have not yet fully recovered from the long-standing negativity. This is evident in the newly added short positions. Today, one of the most popular traders on the Binance exchange opened a $3 million BTC short position. This is because interim rallies over the past weeks have always ended in disappointment for the bulls. So, will it be the same again?
What Happens If Bitcoin Rises?
For weeks, BTC has experienced interim rallies, and those who shorted near the peak levels have made huge profits. There is a strong community of traders preparing for a similar scenario again. However, things may not always unfold as they expect. The fluctuations over the past two days were triggered by a speech at a Bitcoin event by a favorite US presidential candidate.
Although many expected a drop due to the “sell the news” event, BTC rose to $69,950 today. After the 50-day nightmare, Bitcoin is trying to surpass $70,000 again. On the other hand, Trump’s strong election prospects and his statements could mark a historic turning point that might trigger a long-term rise, contrary to the “sell the news” scenario.
If BTC rises and surpasses $73,000, even a wick above $73,132 could liquidate $1.35 billion in short positions. Of course, we should see that the demand from those trying to prevent liquidation fuels the rise.
Crypto Price Predictions
Although MtGox creditors received their assets significantly, the feared selling pressure did not materialize, and the markets priced this in with a drop to $53,500. Altcoins saw more significant destructive losses. So, can we now say the direction is up? The rising wedge on the daily chart highlights the possibility of the price falling again. However, we might see a new attempt at $71,967 before the drop.
This, combined with the CME gap and the possibility of losing trend lines, could trigger a new drop to $68,022. Bulls need closures above $64,925 to avoid the downtrend.
As the RSI approaches overbought levels, there is a risk of liquidating $1.3 billion in long positions with a drop to $68,000 in the feared drop scenario. In other words, BTC could experience a strong breakout in either direction. Traders in futures are now trying to balance, with similar amounts of losses expected in both directions.
Fed meeting, Friday’s upcoming US data, and potential good news from MtGox could strengthen the process in favor of the bulls.
