Bitcoin (BTC) and alternative cryptocurrencies experienced significant declines at the beginning of the new week. BTC dropped to $112,000, while Ethereum (ETH) saw a decrease to $4,200.
The downward trend is believed to be a result of diminishing excitement over the Federal Reserve’s interest rate cut and investors’ cautious approach towards risky assets amidst an uncertain macroeconomic landscape.
Despite various analyses on the market decline, market analyst Omkar Godbole pointed out that Bitcoin long positions on Bitfinex have recently surged by 20%, causing the price to dip below its 100-day moving average.
Godbole highlighted that BTC/USD long positions on Bitfinex often move inversely with Bitcoin’s price movements. He suggested that an increase in BTC long positions could indicate an impending decline.
Typically, a rise in long positions signifies strong buying pressure and an upward trajectory. However, in this scenario, the surge in bullish bets paints a bearish picture for BTC’s value.
Citing historical data, Godbole mentioned that past price drops have frequently coincided with spikes in leveraged long positions on Bitcoin.
“Historical analysis shows that BTC/USD long positions on Bitfinex tend to move opposite to Bitcoin’s price movements,” he explained.
“For instance, previous surges in BTC prices aligned with decreases in Bitfinex long positions; conversely, downturns were accompanied by increases in these same long bets. This conflicting pattern indicates that rising long positions serve as a contrarian indicator rather than a direct bullish signal.”
Henceforth, given the current upsurge in Bitfinex Bitcoin longs, caution is advised against anticipating a bearish trend as per Godbole’s analysis.
*This content does not constitute investment advice.*