At spot exchange rates, bitcoin is firm, but traders doubt the bullish trend after the unexpected drop on June 11. bitcoin is currently stable, trending above $67,000 and down despite gains on June 12.
Still, even at this level, there are concerns because the coin, despite all the confidence across the board, remains below $72,000. This reaction line is shaping up to be a key liquidation area. If it breaks, btc could trigger a short sell-off, accelerating the takeoff to $74,000 and beyond.
Will demand for bitcoin skyrocket in spot markets?
Carrying x, a chain analyst x.com/AxelAdlerJr/status/1800867801516888396″ target=”_blank” rel=”nofollow”>saying that bitcoin is stalling at spot levels below $72,000 because hedge funds are short of futures.
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Although this has been a known fact for some time, hedge funds have accumulated their short positions in btc across the Chicago Mercantile Exchange (CME) by over $1 billion in the last week alone.
Therefore, the analyst says that two things must happen to reverse this effect and support prices. Although short selling of btc on CME is not necessarily a bearish signal, hedge funds are hedging by applying a sophisticated arbitrage strategy, and coin holders should keep the fundamentals in mind.
Hedge funds are simultaneously selling btc futures on CME and buying in the spot market. Therefore, for the coin to break above $72,000 and pierce $74,000, the analyst said users must buy at least double the amount of shorted btc futures in the spot market.
btc Prices Must Fall for Short Sellers to Exit
If there are no incentives to raise spot prices, then bitcoin prices must fall. Falling prices will encourage short sellers, in this case hedge funds, to exit their positions so as not to continue paying funding fees. In a bear market, and when futures prices begin to fall, short sellers must pay out long positions so that the index does not drift.
It remains to be seen whether there will be an increase in demand in the spot market. However, what is evident is that the institutional interest in bitcoin is there, it's just that hedge funds, as seen in their arbitrage trading using CME, want to make profits, regardless of price movements.
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The analyst also x.com/AxelAdlerJr/status/1800778177276748096″ target=”_blank” rel=”nofollow”>shared Another chart to solidify the bullish outlook. The trader used the “Growth Rate” metric to compare the changes in the bitcoin market and the obtained limit.
Currently, the metric is around 0.001, well below 0.002, meaning the market is most likely overheated. The bulls could be preparing to make a comeback.
Featured image of DALLE, TradingView chart
