Bitcoin Consolidates as Shorts Exit the Market

Shorts Leave the Market

Bitcoin consolidates as a vast majority of short sellers leave the market. Currently, price is fluctuating at roughly $7.9k with decreasing volatility. Within the last three days a large majority of shorts in the market have exited. Looking at the chart above you can see Bitcoin shorts are at their lowest point since March of 2018. A sharp decline in the total number of shorts eliminates the possibility of price rallying as a result of a potential short squeeze. Additionally, every time Bitcoin shorts have fallen into the highlighted channel above, a large price decrease has followed.

Daily

Price is looking a bit toppy as we recede to our parabolic trend line (white). If price falls below this trend line our explosive upward price action will likely slow for the time being and find support at the next trend line (red). For now price continues to consolidate and pullback slightly.

4 Hour

Bitcoin is barely holding its parabolic trend line on the 4 hour chart above. Also, RSI has entered a bearish divergence which implies our consolidation will continue in the interim.

If Bitcoin can form support at $8k and increase past $8.3k, price will likely jump straight to $9k. This would add confirmation to the bullish thesis and would allow the bulls to test the critical 0.382 fibonacci level at $9.4k. If the $9.4k resistance level is broken Bitcoin may enter another bubble and make new all-time highs.

Altcoin Market Surges

While Bitcoin is the dominant force in the cryptocurrency market, Altcoins have been experiencing profound gains over the past few days. As a result, Bitcoin dominance has decreased to 56% (coinmarketcap.com). Most projects aside from Bitcoin still have no use case or legitimate functionality. For example, Stellar, the 9th largest cryptocurrency with a market cap of $2.6 billion, was down for two hours yesterday. Nevertheless, Stellar’s price rallied 20% that same day and is currently up 11%. Stellar is a prime example of how immature and irrational the cryptocurrency market still is. At this point, fundamentals have little impact on price and speculation is the only true use case for most Altcoins.

Conclusion

Bitcoin consolidates as price moves sideways. Support remains at $7.7k while $8.3k is the next critical resistance level for the bulls.

Disclaimer: This is not financial advice. I am not a financial advisor. Please do your own research and make objective decisions. The author of the article owns Bitcoin.