Bitcoin Shorts Approach 2018 Peak Amidst Price Consolidation - Analysis

BTC Shorts (BTCUSDSHORTS) are nearing their 2018 high as Bitcoin ranges around its 2018 lows. Is BTCUSDSHORTS going to the moon? Let’s discuss that.

First off, let’s talk about why Bitcoin shorts would be high. Reasons logically include:

1. A lot of people think it is going down.
2. Big players are betting crypto is going down.
3. Big players are hedging against long positions.

In other words, shorts are up, that is a fact. So why are shorts up, well logically it is because people think Bitcoin could go down. However, we don’t know if this is many people on the same page and/or some big players with large positions. Also, we don’t know if these people are covering long positions (we know BTCUSDLONGS aren’t up, but we don’t know about holdings outside of that).

Second, what could happen with shorts high, longs low, and prices near 2018 lows? Here are some logical guesses:

1. The trend is our friend, shorts are high because crypto has been weak and many are wisely betting against it. As the price drops, shorts will close. Consider, ETHUSDSHORTS was much higher July 18th when ETH was in the high $480s than it is today… there was no squeeze, Bitcoin dropped and ETH plummeted.
2. A bullish short squeeze is eminent. In April, the last time we were at a record high for short interest, a massive short squeeze occurred and crypto started on a month long bull run.
3. Bitcoin does short squeeze or drop, but alts don’t follow that trend. So far alts have followed Bitcoin, and historically they have, but in January 2018 they sort of rejected that trend and went their own way. Nothing says that can’t happen again.

In short, I really don’t know what will happen or how one would want to play this. In April there were great rewards for betting against the trends and betting on crypto when it was down in the dirt… but will lightening strike twice? Who knows!?! Maybe BTCUSDSHORTS is going to the moon?

All I would say is that the SEC’s Proshares ETF decision potentially will push things in one direction or another, and that happens this week.