Bitcoin Price Rises to $7,200 but Cyptos Bleed Out

Bitcoin

On September 2, short contracts on Bitcoin started to pile up on BitMEX and Bitfinex, a relatively large portion of the crypto market expressed their negative stance on the short-term performance of Bitcoin price.

Although Bitcoin has successfully broken out of the $7,200 resistance level on September 1, since late August, the dominant cryptocurrency has struggled to see major movements on the upside. Some analysts have said that the stability being shown by BTC is positive, especially if the market prepares to initiate a mid-term rally in the weeks to come.

Shorts Rising

Squeeze, a well-recognized trader in the cryptocurrency community, said earlier today that Bitcoin shorts have risen to previously unseen levels in an extremely short period of time.

“This is the first time in my 5 years of trading Bitcoin that I’ve seen an increase of almost 10,000 BTC of shorts in less than 3 hours on Bitfinex,” Squeeze said.

One big retail trader could have piled on thousands of Bitcoin worth of short contracts in the past few hours, triggering the rest of the market to react, essentially creating a domino effect.

But, an abrupt rise in short contracts does not always lead to the drop in the price of Bitcoin. If the value of BTC increases instead in the next 12 to 24 hours, which is more likely than a drop given its performance over the past week, then all of the short contracts will be liquidated, purchasing Bitcoin.

Currently, BTC is showing decent movement in the $7,200 region. Some investors have suggested that for the cryptocurrency market to experience any major change in trend in the short-term, BTC will either have to drop below the $7,000 mark or break out of $7,500.

Many traders often avoid trading high-risk high-return trades like tokens and small market cap cryptocurrencies during a period like this wherein the short-term price trend of BTC is highly unpredictable.

Ether, the native cryptocurrency of Ethereum, EOS, Litecoin, NEO, and Ontology have shown relatively large losses against both Bitcoin and the US dollar in the past 24 hours, demonstrating the tendency of traders to hedge their holdings to USD-backed stablecoins like Tether (USDT) in times of uncertainty.

The volume of USDT remains above the $3 billion mark, substantially higher than its daily trading volume in late August. But, given that the volume of Bitcoin and Ethereum also remain above $4.4 billion and $1.4 billion, relative to the volume of major cryptocurrencies, the volume of Tether is not significantly high.

Where Does the Market go Next?

Tokens like ICON, Ontology, Aelf, WaltonChain, and 0x are bleeding out due to the uncertainty and volatility in the market, not necessarily due to the weak performance of major cryptocurrencies. Since small market cap cryptocurrencies are always first to fall even in a slight downtrend, the movement of tokens on September 2 was expected.

In the next 12 hours, the Bitcoin price is not likely to dip below the $7,000 level and if it doesn’t, a short squeeze may intensify its movement on the upside. The market still needs to see more from major cryptocurrencies to confirm either a reverse in trend or establishment of new momentum.

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