The $ 83 million Long Bitcoin dropped on March 7, 2020 when the price plummeted from $ 9,225 to $ 8,735. During a period of 5.55% decline, most long orders have disappeared into the pockets of short holders. However, the short seems to be unfinished and still ongoing.
Looking at the current position of Bitcoin will understand better.
BTC / USD | Source: TradingView
When BTC hovered just above the 200-day moving average (DMA, purple) at $ 8,756, the price seemed to stop falling. DMA 200 prevents BTC from falling lower, while DMA 10 prevents higher gains (if price rises). Even if the price is moving above DMA 10, DMA 5 is eagerly waiting to catch the long order.
Usually, when the lower MA moves below the higher MA, it is a downtrend. For example, death cross occurs when DMA 50 moves below DMA 200.
Due to the fall on March 7, DMA 20 has crossed below DMA 50. Similar bearish cross can be seen from February 24. Observing the chart, DMA 5 also started falling due to the recent short order. An intersection of DMA 5 below DMA 10 will signal a downtrend and may imply a decline in BTC prices.
Long Squeeze more?
From the current state of the market, both the RSI and the Orientation Moving Index bottom out into the oversold territory. For long squeeze to take place, the price must rise, attract the next long.
Percent of long and short commands Source: DataMish
According to data obtained from DataMish, long at the time of writing is more than 32,000 BTC and short 4,800 BTC. Thus, the market covers 87% long. Long squeeze can bring BTC up to $ 8,943 after an immediate violation of the $ 8,825 resistance level.
To complete the long squeeze, there must be enough short to push the price down. This is being provided by short and non-preventable short.
Short order BTC | Source: DataMish
From the chart above, it is clear that shortening is on the rise, but a major surge was seen on March 3, 2020 affecting prices, ranging from nearly $ 9,000 to $ 8,700.
So, when long takes BTC to $ 8,825 or higher, long squeeze will start. Eventually pull the price up to $ 8,515 if the short-term momentum continues to rise. Moreover, this theory is supported by a slow but steady increase of short with prevent.
Bitcoin Futures liquidity fell as spot prices plunged
On March 7, prices fell more than 5% in less than 9 hours, pushing liquidity on the futures market down.
The rapid decline in prices along with the huge volume of transactions on unregulated derivative exchanges have widened the gap. Major exchanges that offer Bitcoin Futures products to both wealthy institutional investors as well as the retail crowd have seen liquidity drop.
According to data from skew markets, the $ 10 million Bid-Offer spread has increased significantly. On March 6, the spread for the Seychelles-based BitMEX exchange was 0.2%, with an average of 0.24% over the past few months. At the same time, the falling price has increased the basic score above 60, to more than 0.26%.
B / O difference 10 million dollars on BitMEX | Source: skew
The same trend appears on other derivatives exchanges. Binance viewed the retailer as the center with a difference that increased from 0.49% to 0.58% but still below the average of 0.6%. Japan-based BitFlyer has the highest average difference of 7.18%, increasing B / O from 6.53% to 7.63% in the context of falling prices, up 110 basis points.
In the main sale from 23 to 24 hours on March 7 (Vietnam time), BitMEX has an hourly volume of $ 446 million, $ 350 million and $ 223 million, respectively. In the second drop that pushed the price to $ 8,700, only $ 257 million was traded between 7 and 8 the next day (Vietnam time).
Price XBT / USD | Source: BitMEX
The rapid drop in prices led to a hasty $ 1.27 billion trading on BitMEX, pushing liquidity to levels corresponding to an increase in B / O spreads.
Similar trends have been seen on both OKEx and Huobi as well as other BTC Futures exchanges. The 24-hour volume of the 2 bourses was $ 2.88 billion and $ 1.85 billion, respectively. Since the previous day, volume has increased by $ 660 million for OKEx and $ 560 million for Huobi, focusing on hourly price movements, flashing signs of lower liquidity.
You can see the price of BTC here.
Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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