Bitcoin just broke below $7000 but there was basically no continuation as the price stopped at around $6800 and BTC is now trading at $6900. The daily downtrend is clearly still in place, however, there is a huge lack of strength for the bears.
The daily RSI is now dangerously close to the oversold area and has been overheated for quite a while now. Bitcoin is still relatively stable as yesterday’s move was only a 3% drop, not that significant in the crypto market.
The 4-hour chart has now formed a bear flag although the RSI is really overextended. We are very likely to see some bull action to cool off the RSI.
Bitcoin Shorts Vs Longs
Bitcoin shorts on Bitfinex have increased significantly yesterday after the bear break. They basically doubled although remain quite low overall.
Bitcoin longs, however, are still rising at new all-time highs every single day. In fact, for the last 24 days, they have only increased. A lot of analysts have been concerned about a possible long squeeze, however, Bitfinex long positions only represent a small part of the market.
BitMEX, for example, has way more weight when it comes to long and short positions. Bitfinex’s long positions, however, are a good indicator of the current sentiment which seems to be really positive.
In a downtrend, short positions are usually far bigger than long positions but in this case, long positions are almost 5 times bigger than shorts. A long squeeze could certainly still happen, however, the bears would need to see a lot more continuation moves for that to happen.