The silence of the shorts BTCUSD

30 apr 2020

One can visualize the pain and carnage of the traders that were short Bitcoin going into this move. While neither the amount of short interest nor the percentages long/short were at record levels they were definitely high and had been increasing steadily since the dump in March. If anything it was a great reason to be contrarian as the shorts steadily increased over the last month.

Even though I would normally like to take a short off a 50% price retracement my rules and conditions were not met for a trade. Nor were they met for a margin long. I must be content with the 1x move.

I also took the time this morning to check the arbitrage between the spot BTCUSD and futures markets. The highest futures premium for the September 2020 futures was only 0.4%. That tells me that there is not a tremendous amount of bullish optimism within this move. When we were at this same price level in mid January the upside premium was over 4%.

The futures premium being low and the apparent liquidation of short interest tells me that this move was more of a 'short squeeze' of traders trying to play that 50% retracement as a resistance closing or being force closed (most likely) their positions.