There is a high risk of bitcoin price going on a downward trend in a longer than anticipated period.
Many traders have their hopes high on Bitcoin hitting $10k after the halving event. There are, however, five main metrics that will play a significant role. The five include Funding, bearish divergences, open interest, long and shorts delta, and Liquidity grab.
The total open interest for both the short- and long-term contracts in the leading futures exchanges is currently struggling to increase.
The price of Bitcoin suddenly dropped from $9570 to $8100 on BitMEX on May 10th just a few hours before the halving, the total longs liquidated were worth $200 million in just an hour. What made the open interest of BitMEX to drop may be due to increased liquation.
On May 14th, the price of Bitcoin dropped further to $9200 after getting rejected at $9900. The drastic drop led to up to $42 million to be liquidated. That means that in five days, there is a minimum of $270 million liquidated longs just on BitMEX alone.
From the two liquidations, there are very few investors entering the futures market. That means that investors are at a selling pressure as they aim the $10k resistance level.
From the three major futures exchanges, which are BitMEX, Bitfinex, and Binance, they have an open interest of an average of 72.37% from long contracts.
As of May 15th, there is only $252 million in short positions that were filed from $661.7 million of open long positions. That means that there is a big gap between the long and shorts in a year that has faced so many resistance levels. This pushes Bitcoin to a vulnerable position as there is a possibility of a long squeeze. So far, two main long squeezes have happened in just a week.
According to technical analysts, bearish divergence chances are coming up. This is determined when the relative strength index (RSI) momentum. The RSI needs to increase as the price increases, and if it does not, there is a bearish divergence. If there is a bearish divergence, there is a need for a correction.
Even for the large traders, a small liquidity difference makes a big difference. The price of Bitcoin has been undergoing a roller-coaster in its liquidity levels because of the control of whales. The whales manipulate the price as they seek liquidity.
The resent resistance is a clear indicator that the price is on a downward trend.
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