The number of short bets placed against the price of bitcoin on at least one notable exchange declined to their lowest total in 11 months on Sunday.
Data from Bitfinex shows that bitcoin’s 8 percent drop in price on Sunday was accompanied by a 12 percent drop in the notional value of open short positions, with the total amount of such trades dropping from a daily high of 19,604 to 17,085 BTC, the lowest amount allocated on the platform since March 12 of last year.
The development comes just a week after the total value tied up in all short trades on the exchange reached a six-month low, one of a number of signs that would suggest investors are losing confidence in the idea that bitcoin’s price will further decrease.
Still, the market has appeared inconclusive in its reading of what would appear to be positive indicators.
Up until 3:00 UTC on Sunday, bitcoin was boasting a near 15 percent week-over-week price increase, but it ended just 3 percent higher as a result of Sunday’s sell-off, according to pricing data from CoinDesk.
When such a harsh rejection from a key technical resistance occurs, strengthened bearish sentiment can usually be quantified by an increase in the total amount of funds allocated to BTC/USD short positions, or bets that profit from future declines in price, yet the developments on Sunday contradicted this notion.
BTC/USD Shorts on Bitfinex
At the same time, the bitcoin-denominated value of all BTC/USD long positions on Bitfinex Sunday fell to just 26,433, which was less than 1 percent lower than it started.
As a result, that lack of short interest following the considerable drop in bitcoin’s price is more likely a sign of investors taking profit after the bullish start to the week rather than fresh selling hitting the market.
What’s more, the ratio of the total BTC/USD long to short positions on Bitfinex currently reads 1.43 to 1, making it clear the drop has not completely scared off those favoring a near-term bullish outlook.
Disclosure: The author holds BTC, LTC, ETH, ZEC, AST, REQ, OMG, FUEL, ZIL, 1st and AMP at the time of writing.
Charts bear image via Shutterstock; Charts by TradingView
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