More

    Why Traders Are Cautious On Bitcoin Right Now

    Bitcoin price is back above $50,000 after a short-lived correction in the range below the key level. However, since the cryptocurrency has reclaimed the halfway point to $100K, open interest has skyrocketed.
    The sudden sharp increase in open interest has traders cautious currently. Here’s a closer look at why that’s the case and what could happen as a result.
    Open Interest Climbs Alongside Bitcoin As It Surpasses $50,000
    Bitcoin is still reeling from the whale-included selloff at $58,000, that sent the cryptocurrency dropping by 20% in just days. The leading cryptocurrency couldn’t sustain above a $1 trillion market cap, despite making it over the milestone temporarily.
    Related Reading | Bid Side In Bitcoin Disappears Amidst Jittering “Macro Environment”
    Price action is now back above $50,000, but on the way up, the market has added what one pseudonymous crypto trader says is “tons” of open interest.

    Open interest has surged since the break back above $50,000 | Source: hyblockcapital.com
    According to the trader, this suggests that others have taken long positions on the way up expecting a sizable price increase. An increase in leveraged positions could provide enough fuel for a deeper correction, if long positions are forced to cover amidst a stronger wave of selling.
    Markets often take the path of maximum pain, which could result in a cascade of long liquidations on the way further downward.
    The Many Reasons Why Crypto Traders Must Proceed With Caution
    Bitcoin is in an uptrend, and according to Dow Theory, should be considered in an uptrend until the market says otherwise. But all bull cycles do come to an end, and that finale could arrive at any time.
    Traders should currently be cautious of a long squeeze as highlighted above, but technicals are starting to show signs of exhaustion.

    Technicals could also point to a larger correction in Bitcoin | Source: BTCUSD on TradingView.com
    A TD Sequential TD 9 sell setup on the not-oft-used two-week timeframe has triggered two candles ago. The TD 9 acted as the exact top in 2019, and after appearing in 2017, took exactly two candles before the reversal arrived.
    Related Reading | This Unique Take On Bitcoin Suggests A Bear Phase Is Near
    Here it is, another two candles past the TD 9 sell setups appearance, after a red doji, and during the bloodiest month in Bitcoin’s history. The current two-week candle has more than ten days left to go, and if it closes red and below $40,000 per BTC, an evening star bearish pattern will have formed.
    An evening star pattern after a TD 9 while the MACD and RSI are at record overbought levels could mean a sizable correction is due. With open interest so high, there are plenty of reasons why traders must proceed with caution.
    Featured image from Deposit Photos, Charts from TradingView.com

    Related articles

    Comments

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    Share article

    Latest articles

    Newsletter

    Subscribe to stay updated.

    bitcoin
    Bitcoin (BTC) $ 41,439.00
    ethereum
    Ethereum (ETH) $ 2,579.08
    tether
    Tether (USDT) $ 0.998956
    binance-coin
    Binance Coin (BNB) $ 338.69
    cardano
    Cardano (ADA) $ 1.35
    xrp
    XRP (XRP) $ 0.754913
    usd-coin
    USD Coin (USDC) $ 0.998408
    dogecoin
    Dogecoin (DOGE) $ 0.207514
    polkadot
    Polkadot (DOT) $ 18.12
    binance-usd
    Binance USD (BUSD) $ 0.998497
    uniswap
    Uniswap (UNI) $ 22.36
    bitcoin-cash
    Bitcoin Cash (BCH) $ 544.54
    chainlink
    Chainlink (LINK) $ 22.66
    litecoin
    Litecoin (LTC) $ 145.47
    solana
    Solana (SOL) $ 35.05
    wrapped-bitcoin
    Wrapped Bitcoin (WBTC) $ 41,442.00
    matic-network
    Polygon (MATIC) $ 1.08
    ethereum-classic
    Ethereum Classic (ETC) $ 52.00
    stellar
    Stellar (XLM) $ 0.286339
    theta-token
    Theta Network (THETA) $ 6.09
    vechain
    VeChain (VET) $ 0.089512
    internet-computer
    Internet Computer (ICP) $ 42.24
    dai
    Dai (DAI) $ 0.999073
    okb
    OKB (OKB) $ 19.55
    filecoin
    Filecoin (FIL) $ 55.59
    compound-usd-coin
    cUSDC (CUSDC) $ 0.022047
    terra-luna
    Terra (LUNA) $ 11.30
    tron
    TRON (TRX) $ 0.065274
    cdai
    cDAI (CDAI) $ 0.021508
    monero
    Monero (XMR) $ 241.72
    aave
    Aave (AAVE) $ 325.38
    eos
    EOS (EOS) $ 4.08
    compound-ether
    cETH (CETH) $ 51.75
    ftx-token
    FTX Token (FTT) $ 35.02
    cosmos
    Cosmos (ATOM) $ 12.94
    amp-token
    Amp (AMP) $ 0.071245
    pancakeswap-token
    PancakeSwap (CAKE) $ 16.39
    the-graph
    The Graph (GRT) $ 0.696774
    crypto-com-chain
    Crypto.com Coin (CRO) $ 0.128372
    shiba-inu
    Shiba Inu (SHIB) $ 0.000006
    neo
    NEO (NEO) $ 43.80
    leo-token
    LEO Token (LEO) $ 3.02
    algorand
    Algorand (ALGO) $ 0.854741
    bitcoin-sv
    Bitcoin SV (BSV) $ 143.61
    maker
    Maker (MKR) $ 2,989.36
    klay-token
    Klaytn (KLAY) $ 1.05
    celsius-degree-token
    Celsius Network (CEL) $ 6.15
    tezos
    Tezos (XTZ) $ 3.09
    iota
    IOTA (MIOTA) $ 0.901369
    avalanche-2
    Avalanche (AVAX) $ 13.56