Bitcoin Shorts - Is any of this ringing a bell yet?

6 apr 2018

Good evening amigos, it's Malacophonous Mike,

I wanted to post this as a separate post from my ongoing Bitcoin overview as i've seen a number of things mentioned regarding the ATH of Bitcoin shorts and why it means the price is going to drop significantly.

Now before I start, I would like to say this is not a 'correction is over, grab your moon boots' kinda thing, we all have our own views on reversal points. This is a look at the fundamentals of what is undeniably a somewhat emotional and manipulated market.

So Bitcoin shorting has reached an all time high! So surely this means that Bitcoin's about to throw itself off a cliff because all those clever people shorting can't be wrong... right? Firstly, it seems important to draw your attention to the chart above... have we seen a similar leap upwards before on any other charts? Charts that we might have spent more time looking at than we would care to admit lately? So, what happened next on those charts?

Seeing a fever pitch of shorting is in my view not the sign that we are going down to the pits of hell, quite the opposite. It shows a state of complacency that we 'must' be going down, as surely anyone who says otherwise still just can't accept they're probably not about to purchase a specific Italian brand of car. This is the same mentality that led to so few shorts on the 6th of January.

This works directly into the hands of the big players, if I needed to buy a large position of Bitcoin via an exchange (sadly, not a dilemma I have presently) I need to do this without inflating the price for myself, so when do I get in position? When the smaller traders are all throwing their Bitcoin at me of course.

'Fine' I hear you say, 'well what if it's just so blindingly clear that we are going down, then of course everyone will open shorts'.

But is that the case?

This website in itself is a useful tool for those who might not have an understanding of TA, so when an individual comes here or any other source and reads some of the apocolyptic conclusions many are posting, it is reasonable to say they are going to take this at face value and look into ways capitalise on the informarion they believe to be accurate.

This huge increase is not necessarily a mass of smart money shorting the market, I have seen many questions asked on forums about how to short Bitcoin by inexperienced traders and you can see it here from the popularity of posts here on the subject. You can observe see an interesting pattern in the uptick in google search trends for searches relating to this over the past few months (although we can probably assume the launch of futures and interest surrounding this likely distorts the figures somewhat).

The point of my ramblings above is that hopfully it might help you to look at the news on 'record high' short positions in a more rational light. There is probably a sprinkling of famous stock trader quotes pertaining to not following mass opinion that I could add, but you get what i'm shooting at and I'm not that guy.

Finally, I am not saying we are not going to make a move down to a limited degree. But we are approaching an interesting reversal point and as always if a target seems too obvious then the market will usually find a way to surprise you.

Cheers for reading