As a result of the last major decline in cryptocurrency prices, Bitcoin saw below $30K. After the sudden crash on May 19, this decline led to long liquidations on derivatives exchanges. In particular, it is stated that 22,500 BTC shorts with a total value of $715M were closed on Bitfinex.
Bitfinex whales are likely to have a profound impact on price action, as buying pressure is relatively low compared to other exchanges. Also, the selling pressure has not been completely absorbed by the platform compared to other derivatives exchanges.
Why is closing short positions important?
The closing of the shorts paved the way for the price to return to pre-collapse levels. The last two and a half months have been tough for Bitcoin price, according to the chart. The price has dropped nearly 40% in the last 60 days and since the crash, the recovery has been critical for the asset to move on to the next phase of price development.
If the price trend in 2019 is followed, Bitcoin price could recover from the current drop in 2-4 weeks and close 2021 above $60K. This is how Bitcoin crossed psychologically significant price levels in December 2018 / January 2019.
The price fell below $30K for the first time in 5 months. MicroStrategy currently holds 105,000 Bitcoins with an average purchase price of $26K, which lowers the psychological support level for the coin from $30K to $26K. The current price action offers a trailing profit booking opportunity as the price drops below $30,000.
If we experience a break in the current accumulation phase, we may see a decrease before the rally begins, with the decrease in Bitcoin reserves on the exchanges. The change in supply is likely to have this effect on trader sentiment. Those who HODL continue to HODL during declines and recoveries.
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