Bitcoin’s price has taken a bit of a dive recently, after hitting a new record high last week. It looks like the buying frenzy might be slowing down, especially with the overall market feeling a bit weak at the end of May. Predicting what happens next is tough, but some interesting data from a major exchange might give us a clue.
Bitfinex Longs and Bitcoin’s Price: An Inverse Relationship?
Crypto analytics firm Alphractal recently looked at the connection between leveraged “long” positions (bets that the price will go up) on Bitfinex and Bitcoin’s price. They found something interesting: the more long positions there are on Bitfinex, the more likely the price is to drop. Conversely, fewer long positions might mean Bitcoin is about to climb again.
Why is this? Alphractal suggests that many traders often guess wrong about the market. When their predictions fail, they’re forced to sell, pushing the price down.
The Current Bitfinex Situation and Bitcoin’s Future
Alphractal noticed that the number of long positions on Bitfinex is falling. If this continues, they believe Bitcoin could start rising again. However, if the number of long positions starts to increase, it could signal a significant price drop.
Bitcoin’s Current Price
At the moment, Bitcoin is trading just above $27,000, down over 2% in the last 24 hours and more than 4% over the past week.
