Here’s Why Shorting Bitcoin Now Could Likely Prove to be Costly

After a strong show last week, Bitcoin (BTC) and the broader cryptocurrency market are undergoing a mild retracement. Having faced a strong rejection at $25,000 levels, Bitcoin (BTC) is trading 2.90% down at a price of $24,200 with a market cap of $466 billion.

The recent pullback in the Bitcoin price comes ahead of the Federal Reserve’s FOMC meeting later today. On the other hand, macro sentiment is also not supporting the current rally. On Tuesday, February 21, Nasdaq (INDEXNASDAQ: .IXIC) tanked 2.5% slipping under 11,500 levels.

In order to understand where’s Bitcoin heading from here, let’s take a look at the trader action here. Popular crypto analysts Ali Martinez explains that Bitcoin has two key support areas on the downside. He writes:

1. The first one is between $22,659 and $23,325, where 1.41 million addresses bought 711,550 $BTC.
2. The second one is between $20,426 and $21,167, where 933,690 addresses bought 542,160 #BTC.

Furthermore, the traders’ action on Binance shows that they have been buying the dips. 24 hours ago, nearly 53.54% of all accounts on Binance Futures went short followed by a $1,000 drop in the Bitcoin price.

But now that the BTC price has corrected, 58.73% of all accounts on this crypto exchange with an open BTC position are going long! Meaning traders are making the most of the BTC price dip over the last 24 hours. 

Will Bitcoin Price Crash Going Ahead?

As the macro sentiment doesn’t seem to be strong enough with chances of US recession likely ahead, many are expecting a Bitcoin price crash as well. The monetary tightening by the Fed puts risk-ON assets like Bitcoin and cryptocurrencies at a greater risk of falling. But citing on-chain data, analyst Ali Martinez stated explained why he’s not short on Bitcoin. He wrote:

Why I’m not shorting Bitcoin to $10K like some “renowned” analysts claim to be? The aSORP behaves today as it did in 2018. After it marked the bottom at 0.914, it jumped to 1.017, and now it’s retesting the crucial 1.0 support. If this level holds, it will confirm the bull run.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.