Bitfinex shorts crumble, bears capitulate after Bitcoin holds above $30K

Bitfinex shorts crumble, bears capitulate after Bitcoin holds above $30K

On June 25, the amount of Bitcoin (BTC) margin shorts at Bitfinex increased by 22,000, equivalent to $726 million. At the time, Cointelegraph reported that there was a significant increase in Bitfinex's spot volume market share starting at 9 am UTC, matching the demand in the short margin.

Data confirms that one (or more) whales actively shorted the market, betting on a price decrease. The average price of the trade was around $33,000, so every $500 difference would result in an $11 million profit or loss when closing the short position.

Our top trading bots

Related: Why Bitcoin's next breakout may not be an altcoin season signal

In the cryptocurrency world, traders tend to imagine that for some entity or group to build such a sizable position, there must be some 'inside' knowledge to protect them. However, as previously shown by Cointelegraph, the Bitfinex margin shorts from early June were underwater by $65 million when Bitcoin reached $40,400 on June 16.

Bitfinex shorts crumble, bears capitulate after Bitcoin holds above $30K
Bitcoin price at Coinbase, USD (left) vs. Bitfinex BTC Margin Shorts (right). Source: TradingView

The important distinction between margin trading and futures (perpetual or quarterly) is that margin traders might use their own Bitcoin to close the trade. Thus, instead of buying it at the market, one needs only to inform the exchange that his spot holdings should be used to cover the short position.

The same feature is not available at futures markets because the contracts are synthetic. Depositing 10 Bitcoin at the exchange does not "free" a short seller from having to actually buy back the $360,000 worth of contracts.

Therefore, the short position could have been closed even if Bitfinex's spot volume doesn't completely account for the $900 million traded during that 8-hour period on June 25.

Bitfinex shorts crumble, bears capitulate after Bitcoin holds above $30K
Bitcoin spot exchanges aggregate volume. Source: Coinalyze

Once again, the margin short close took place as the spot volume on Bitfinex increased on June 27. Therefore, it is reasonable to assume that the entities closing the margin trade did not previously buy Bitcoin to cover it.

The average price as the 22,000 Bitcoin margin shorts was closed in the 20 hours starting on June 26 afternoon was $32,500. This data indicates a potential $11 million gross profit for the trade. However, it is worth noticing that on June 26, Bitcoin peaked at $32,700, causing those margin shorts to face a momentary $15.4 million loss.

These traders could have closed their position as Bitcoin tested the $31,500 support, but the price showed resilience, and this might have erased most of the trade's gains. Regardless of what caused the short trades to be closed, it displays weakness from bears or a considerable discomfort in holding bear positions below $35,000.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Continue reading about Cointelegraph
Axie Infinity refreshes record high as AXS ascends 131% in just 3 days
The price of Axie Infinity’s native token, AXS, more than doubled in just three days of trading amid speculation that it is going to revolutionalize the...
Kraken CCO will join crypto exchange Bitstamp to run US operations
Cryptocurrency exchange Bitstamp has hired Robert Zagotta, chief commercial officer of Kraken, to be the first CEO of its business in the United States. In...
Fantasy soccer NFT platform Sorare reportedly closing in on $532M in funding
Reports have surfaced that French NFT-based soccer trading card game developer Sorare is closing in on a $532 million funding round with a valuation of...
Nonfungible tokens soar even as Bitcoin price drops close to $32,000
Today the wider cryptocurrency market finds itself looking for something to spark some momentum as Bitcoin (BTC) price dropped to $32,300 and altcoins sustained...
Crypto options are turning mainstream
Despite ongoing vaccination efforts and pandemic aid, the world’s economy looks remarkably different than it did over a year ago. The new financial landscape...
Bitcoin volatility will always disappoint some investors: Michael Saylor
MicroStrategy CEO and Bitcoin evangelist Michael Saylor recently featured in an interview to share his insights into the global macro environment alongside...
Mining rig maker Canaan argues against wholesale crackdown on bitcoin mining in China
SHANGHAI/HONG KONG (Reuters) - A major Chinese maker of bitcoin mining machines argued against an indiscriminate crackdown on cryptocurrency mining in China,...
Dogecoin whale activity slows down as billions of dollars depart blockchain
After a flurry of activity that saw Dogecoin (DOGE) briefly process a higher dollar value of daily transactions than Bitcoin (BTC) and Ether (ETH) combined,...
Litecoin Falls 24% In Bearish Trade
Investing.com - Litecoin was trading at $138.882 by 10:26 (14:26 GMT) on the Investing.com Index on Sunday, down 23.59% on the day. It was the largest one-day...
GameStop saga paves the way for a new decentralized financial order
Every significant transformation comes with a new toolset, one that is always surprising at the time and obvious in hindsight. Bitcoin (BTC), climate change...
UK authorities to focus on stablecoin regulations to prevent monopolies
John Glen, the United Kingdom's financial services minister, has said that stablecoins will be the main focus of the government’s crypto regulatory activity.Glen...
Ethereum Classic 51% Attacker Reportedly Returned $100,000 to Exchange
Cyber money exchange Gate.io has informed the general public about the return of previously stolen $100,000 worth Ethereum Classic units. According to the...
Bitcoin Is An Asset: VC Investor Proves Buffett Wrong
Last week the Oracle of Omaha and the third wealthiest person on the planet with net worth $84 billion Warren Buffett set himself straight concerning...
Bitcoin Plunges Below $8,600 As Crypto Market Marks Another ‘Bloodbath’
Today, February 1 might mark another ‘black’ day in the history of cryptocurrencies. On this day first ever mined cyber-coin in the world – bitcoin – achieved...
Pavel Durov Will Release His Cryptocurrency This March
The most fashionable instant messenger Telegram plans to launch a preliminary ICO. The goal is to earn $500 million in investments in its own blockchain...