Bitcoin (BTC) heavily shorted on BitMEX, here’s where this could lead
Bitcoin’s funding rate on BitMEX sees its most negative ratio since March
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According to the chain analysis firm SentimentBitcoin is being heavily shorted on BitMEX, with massive bets against the price.
Santiment observes that Bitcoin’s funding rate on BitMEX, a leading cryptocurrency derivatives exchange, is seeing its most negative ratio.
The previous instance where heavy betting against the BTC price was recorded was in mid-March, and the Bitcoin price jumped 31% afterwards.
According to Santiment analysts, prices are more likely to rise when the crowd overwhelmingly assumes they will fall. This is because the scenario outlined earlier often increases the likelihood of a short squeeze.
A rally that results from traders covering their bearish short bets is referred to as a “short squeeze”. In other words, the strong buying pressure “squeezes” the short sellers out of the market.
As investors awaited the latest US inflation report on Wednesday, Bitcoin (BTC) swung sideways to around $27,000. According to data from CoinMarketCap, the leading cryptocurrency was trading at $27,560 at the time of writing, down 0.29% from the previous day.
Investors will keep an eye on the CPI release for hints about the US central bank’s decision-making process at its next policy meeting in June. The federal funds rate was raised by 25 basis points (bps) earlier this month, making it the highest it has been in 16 years.
On-chain situation for BTC
In a recent tweet, chain analytics firm IntoTheBlock took a closer look at the BTC on-chain situation.
It notes that there hasn’t been much historical demand below today’s price level before around $24,000. This could indicate that the BTC price may not have strong buying support in a further downward move below current levels.
On the other hand, stronger buying is seen in the areas leading up to 30K, which is consistent with indicators on the chain that point to long-term holders not selling at these levels.
IntoTheBlock analysts suggest that these points could indicate further buying pressure if the price makes it to the upside rather than forming resistance on a move up.
Meanwhile, the percentage of Bitcoin holders in profit has declined over the past month, currently at 64.98%, which is the lowest point since March. The advantage here is that corresponding falls in surplus holders this year have been relatively short-lived due to increased buying pressure.
