The cryptocurrency market has been rife with comments and inputs from various proponents, with many claiming that Bitcoin and the rest of the altcoin market will enjoy an unprecedented bull run soon. This sentiment has been helped along by significant movements, not just in the cryptocurrency’s price, but also in other metrics such as transaction volume and hash rate.
A recent survey of the Bitcoin ecosystem revealed how massive short positioning on Bitfinex has actually had an effect on the cryptocurrency’s price. Jacob Canfield, a popular cryptocurrency trader, recently tweeted,
“Massive #bitcoin short position closing has happened 4 prior instances on @bitfinex 3/4 times price dropped an average of 23% afterwards 1/4 times price increased by 28%. It’s possible we range for a while before continuing our uptrend. Expecting more volatility though.”
The only time Bitcoin’s price went up due to the short closing was back in April 2018. During the month of April, Bitcoin rose from $6584.60 to $7971.11 in a short span of time. After the April phenomenon, Bitcoin recorded another price hike in July after the price crash in May. In July, Bitcoin rose from $6220.88 to settle at $8391.83.
Bitcoin shorts had an impact on the cryptocurrency’s price recently after the price dropped below the $11,000 mark after the shorts took control. The drop resulted in $1000 being shaved off Bitcoin’s value, forcing it to trade at $10,800.
The price correlation has also worked the other way, where the price fluctuation affected short sales. BitMEX, a popular cryptocurrency exchange, saw around $64.38 million shorts being liquidated after Bitcoin prices breached the $10,000 threshold.
At press time, Bitcoin was trading at $11,699.93 with a total market cap of $208.41 billion. The cryptocurrency held a 24-hour market volume of $26.9 billion, as the cryptocurrency was going up by a mediocre 1.16 percent.