Lower trading volumes point to further sideways action
With more pressing issues on the minds of traders, it seems that media interest and open interest for Bitcoin is weening. Current trading volume in the CME and across other exchanges has been leveling off and although we witnessed a spike today on a daily basis, volume levels on average have been steadily shrinking.
While some analysts view this as bullish, Joseph Young wrote for Cointelegraph, “The Bitcoin futures market represents most of the overleveraged trades in the Bitcoin market and popular platforms like Binance, BitMEX, and ByBit enable leverage of up to 125x. When traders are highly leveraged, they are vulnerable to liquidation. For instance, if a 10x long contract placed at $10,000 is liquidated at $9,000, it forces the buyer to market-sell the position. Assuming there are a large number of traders in similar positions, this increase in selling pressure and can catalyze a major sell-off in Bitcoin price.” I am not convinced this is the case. Simply put this could work both ways for the digital asset as increased leveraging could also force liquidate short positions causing a major uptick in pricing.
What I can make a case for is a flat top ascending bottom formation as we have had a solid ceiling in BTC at $11,200 while at the same time achieving higher lows consecutively. A very short-term trader could profit by entering from the long side (currently $10,580) and exiting the trade at $10,800, for a small profit that I believe would be a relatively safe bet.
Although past that I believe traders will have a hard time getting profits from the market playing either side as I foresee that BTC is still well stuck in a rut so to speak in its current range of $10,000 - $11,200.
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