$500 Million In Bitcoin Shorts Pile In As BTC Price Below $20K

The trading session for Bitcoin was low-volatility, as Bitcoin moves within a narrow range. The cryptocurrency is flirting with a critical support zone at around $19,500 which has been able to hold despite last week’s spike in selling pressure.

The price of Bitcoin (BTC), as of the writing of this article, trades at $19,000. There has been sideways movement over the past 24 hours and the week. The price of Bitcoin is stalling and crypto investors appear to have shifted their focus to other coins or are waiting to see whether these levels hold.

BTC’s price moving sideways on the 4-hour chart. Source: View Tradingview BTCUSDT

Others traders expect Bitcoin to test its critical support level at $18,000, which is a multi-year low. The BTC/USDT trade pair experienced an increase in Open Interest (OI).

Trade under a pseudonym notedThis week’s increase in Open Interest has been almost half of a billion dollars. That is 24,000 BTC. These short positions have been “aggressively” piling in as BTC’s price sits on a massive wall of bid orders.

There are over $50 million in buy orders sitting immediately below BTC’s price current levels. The price of the number one cryptocurrency has also been bouncing back from $19,500 over the past month’s downside price action.

These short positions are unlikely to reach $500 million. With Bitcoin’s liquidity rising, it is possible for short-term squeezes to increase. The current BTC market conditions are often the trigger for a short squeeze. If the price trend higher, there will be a flood of liquidations due to the accumulation of shorts.

As liquidations increase the bullish momentum in Bitcoin, this is rocket fuel. According to the pseudonym trader:

The shorts could benefit from this but spot will soon start bidding higher for their position. Spot will support the price drop and they can sit back comfortably, so no need for them to make any moves. However, they are still vulnerable.

Is there anything that could stop a bitcoin short squeeze?

The extended vacation in the United States has caused low volatility for crypto. As traditional markets reopen tomorrow, there might be more volatility in the first cryptocurrency.

A green open for major stock indexes, such as the S&P 500 and the Nasdaq 100, might push BTC’s price higher. A reverse scenario could lead to an increase in downside liquidity.

Additionally, according to the DXY Index the U.S.dollar recently broke free of its multi-decade old resistance and it reclaimed levels that were last tested back in 2003. To confirm this breakout, the currency could retest lower levels. The crypto market could rally, thus allowing for some flexibility.

Bitcoin DXY Index
DXY Index (U.S. dollar) rises above the multi-year resistance in the weekly chart. Source: Tradingview

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