Funds in Short Positions on Bitcoin Drop to 6-Month Low

The amount of money allocated to short bets against bitcoin fell to a more than 6-month low today.

Feb 19, 2019 at 7:44 p.m. UTC
Updated Sep 13, 2021 at 8:54 a.m. UTC

The amount of money allocated to short bets against bitcoin fell to a more than 6-month low during Tuesday’s trading session, data from the popular cryptocurrency trading platform Bitfinex reveals.

At 13:00 UTC today, the total funding in BTC shorts, or positions that would profit from a decline in the price of the underlying bitcoin asset, fell beyond the recent low of 18,992 BTC set this past November to reach 18,888 BTC - the lowest amount seen since Aug. 4, 2018.

The development comes a day after bitcoin’s price increased 8 percent, which likely trapped investors with a bearish outlook on the wrong side of the market, causing them to cover a large number of short positions.

Current figures show a 28 percent drop in the amount of funds in bitcoin shorts since the beginning of the day yesterday.

CoinDesk - Unknown

Interestingly, bullish bets on Bitfinex, known as “longs,” have also witnessed a sharp decline in the past 48 hours.

Data from Bitfinex further reveals the amount of BTC/USD longs have dropped by a similar 29 percent from yesterday’s high, which is likely a sign of investors are deleveraging, or taking profit after bitcoin’s near 18 percent price increase over the past 11 days.

As it stands, the ratio of long to short positions is 1.42 to 1, meaning there are 1.42 BTC in a long position per every 1 BTC is a short position on Bitfinex. The ratio is a slight decline from the most recent high of 1.54 to 1 set on Feb. 15.

As previous analysis from CoinDesk notes, an unusually high long/short ratio can be a sign of an impending "long squeeze," or rapid covering of long positions which increases the rate at which price declines. However, the current ratio of 1.42 is lower than both the ratio of 1.8 to 1 set in August and the all-time high ratio of 3.74 to 1 set in February of 2018.

Disclosure: The author holds BTC, LTC, ETH, ZEC, AST, REQ, OMG, FUEL, ZIL, 1st and AMP at the time of writing.

Teddy-bear-ill image via Shutterstock; charts by TradingView

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
After the Terra Meltdown: What's Next for Stablecoins?

The largest token collapse in crypto history. So let Luna die.

The largest token collapse in crypto history. So let Luna die.

CoinDesk - Unknown
2
CoinDesk - Unknown
5 Key Takeaways From a16z's State of Crypto Report

The venture firm is extremely bullish on Web 3.

The venture firm is extremely bullish on Web 3.

CoinDesk - Unknown
3
CoinDesk - Unknown
Regulators Are Paying Attention to UST

The collapse of terraUSD (UST) is algorithmic stablecoins’ Libra moment.

The collapse of terraUSD (UST) is algorithmic stablecoins’ Libra moment.

CoinDesk - Unknown
4
CoinDesk - Unknown
San Francisco NFL Player Alex Barrett Taking His Salary in Bitcoin

The most valuable crypto stories for Thursday, May 20, 2022.

The most valuable crypto stories for Thursday, May 20, 2022.

CoinDesk - Unknown