Trader closes $34 million Bitcoin short position following reversal signal

More than 20% of short positions closed on Bitfinex this morning, leaving traders confused as to which direction Bitcoin will go next

The amount of Bitcoin short positions on cryptocurrency exchange Bitfinex fell by 20% this morning.

There was nearly 23,000 Bitcoin being held in short positions overnight, but this dwindled dramatically this morning following a 6,500 Bitcoin short order being closed.

Usually a move of this magnitude would move the Bitcoin price to the upside, but the cryptocurrency stalwart has remained below the $5,350 level of resistance.

The lack of price action could be attributed to a hidden sell order being placed, which would mean that in spite of the $34 million short position closing, price would remain pegged to the hidden order.

The amount of long positions on Bitfinex did increase from 23,800 to 26,000, which could suggest that a trader flipped their short position to long as a result of the ongoing market rally.

The amount of short positions on Bitfinex is now at its lowest point since March 2018, when optimism of a bullish reversal was still relatively high.

But now, 15 months after the bull market officially ended, a reversal seems to be in sight after Bitcoin’s weekly candle closed above the 200 exponential moving average (EMA) on the daily chart for the first time since July’s $8,400 top.

The amount of volume during last week’s rally broke the previous all-time high, with $87 billion being traded in the cryptocurrency markets within a 24-hour period.

The fact that Bitcoin’s weekly candle closed above the $5,150 level of resistance was critical, with many suggesting that a retest of the broken support trendline at $5,900 will be the next level to take out after $5,350 falls to the bullish sentiment.

The $5,900 level was used as support six times during this bear market, with price eventually falling in November as Bitcoin hit new yearly lows.

As it was such a staunch level of support, it will act as a similarly difficult level of resistance if price continues to move to the upside.

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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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