Skew researchers have revealed that funds have been increasing short exposure throughout the previous weeks as the Bitcoin price rallied to hit 2020 high at $10,500. The researchers asked whether this is cash and carry strategies or outright shorts.

How This Could Impact On the Market

Short term price actions in the crypto market are typically swayed by long and short contract liquidations. Sellers who have short on Bitcoin mainly expert the coin’s price to go down. Such traders begin to panic close or adjust their positions when they realize the coin has begun an uptrend.

When this happens, it adds strong short-term momentum to an asset. Many investors with large amounts of BTC usually place hedge shorts when the BTC price corrects significantly in the short term. But they usually have net long positions in place.

Considering that those whales are institutional investors rather than retail traders, it is highly likely that most of the short exposure are simply hedge positions against the market. Even if BTC begins to show signs of a bullish market continuation by revisiting the $10,500 year high, it could convert short positions to market buy orders in a squeeze. This will add more buying demand in the market.

The sharp rise of Bitcoin price after dropping to $9,350, prompted analysts to categorize it as a liquidity fill. Analysts have described the $9,550 support level as a key level that prevents BTC from witnessing a sharp correction in the weeks ahead, should bulls defend it until weekly close.

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