bitcoin has been trending lower after failing to break above $66,000 in early May, deflating hopes of immediate price gains after the Halving. Carrying x, an analysttwitter.com/AxelAdlerJr/status/1788479569311261158″ target=”_blank” rel=”nofollow”> shared Chain data that paints a more nuanced picture than a simple loss of confidence in recent weeks.
The analyst, pointing to data from CryptoQuant, notes that leveraged traders on perpetual trading platforms like Binance appear to be closing their positions rather than opening new ones. The analyst points out that the reading is -20% in the monthly variation of open interest.
<img decoding="async" class="size-full wp-image-607222" src="https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Traders-Close-More-Positions-as-Prices-Break-Above-60000.jpg" alt="btc open interest in one month | Source: x Analyst” width=”1024″ height=”576″ srcset=”https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Traders-Close-More-Positions-as-Prices-Break-Above-60000.jpg?w=2048 2048w, https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Traders-Close-More-Positions-as-Prices-Break-Above-60000.jpg?w=460 460w, https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Traders-Close-More-Positions-as-Prices-Break-Above-60000.jpg?w=768 768w, https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Traders-Close-More-Positions-as-Prices-Break-Above-60000.jpg?w=860 860w, https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Traders-Close-More-Positions-as-Prices-Break-Above-60000.jpg?w=1536 1536w, https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Traders-Close-More-Positions-as-Prices-Break-Above-60000.jpg?w=750 750w, https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Traders-Close-More-Positions-as-Prices-Break-Above-60000.jpg?w=1140 1140w” sizes=”(max-width: 1000px) 100vw, 1000px” loading=”lazy” data-recalc-dims=”1″/>btc open interest in one month | Source: x Analyst
At this level, it shows that there are more traders closing more positions than opening new ones. This development suggests that most traders adopt a wait-and-see strategy, watching price developments.
Related reading
Despite the decrease in open positionsIt is important to note that this is not a sign of btc falling or invalidating a potential rise. The analyst interpreted this contraction as a strategic move by traders, who are cautiously optimistic and do not abandon the market due to bearish expectations.
in a separate twitter.com/AxelAdlerJr/status/1788491093383721019″ target=”_blank” rel=”nofollow”>mail, the analyst added that the bitcoin market needs the current wave of liquidation and “negativity” to accumulate short positions. All short positions opened at spot levels are betting that btc will continue to fall, even breaking below $56,500.
However, the more short positions there are, the greater the chance of a “short squeeze” forming. When this happens, there will be a sudden surge in prices, liquidating short positions and forcing sellers to buy back into the market to prevent further damage.
Despite the bullish potential hinted at by on-chain data, prices remain confined within a narrow range. Last week, the bulls failed to close above $66,000, confirming the impressive run on May 3.
x/ctQktUxZ/”>x/ctQktUxZ/” alt=”bitcoin is trending sideways on the daily chart | Source: BTCUSDT on Binance, TradingView” width=”1233″ height=”592″/>bitcoin is trending sideways on the daily chart | Fountain: x/ctQktUxZ/” target=”_blank”>BTCUSDT on Binance, TradingView
bitcoin encountered resistance and is moving towards the psychological level of $60,000. Depending on price action, losses below this line could accelerate the collapse towards $56,500 recorded in early May.
Going forward, traders will closely monitor how prices develop after the important halving on April 20. Considering the approval of spot bitcoin exchange-traded funds (ETFs) and the participation of institutions, some analysts expected prices to skyrocket immediately.
Related reading
However, this has not been the case. Prices remain stagnant amid fluctuating inflows to spot ETFs, and the US Federal Reserve is still not cutting interest rates.
Featured image from Shutterstock, chart from TradingView
