It has been a wild week for the crypto markets, with investors having to digest a plethora of news developments that largely favored Bitcoin bears.
That being said, the market surprisingly didn’t react too negatively to any of these developments, which seems to be a sign of growing maturity.
One of the main developments this week that has driect implications for the crypto market is the CFTC’s decision to charge the three co-founders of BitMEX with multiple regulatory violations – some of which charges even carry prison time.
BitMEX’s size and influence over the entire market cannot be overstated, which makes the prospect of its domain being shut down by the U.S. government quite frightening – regardless of what the likelihood of this happening is.
One trader is now noting that open interest on BitMEX is beginning to find a floor and trend higher following a mass exodus of money away from the platform.
He notes that it appears traders are beginning to flip short on Bitcoin, which could mean that a squeeze is imminent.
Bitcoin Sees Extraordinarily Tight Bout of Sideways Trading
At the time of writing, Bitcoin is trading down marginally at its current price of $10,560. This is where it has been trading throughout the past few days, with buyers and sellers reaching an impasse following the volatility seen earlier in the week.
Where the entire market trends in the days and weeks ahead will likely depend primarily on how this ongoing consolidation phase resolves.
If bears take control, they will need to push Bitcoin below its $10,200 support in order for a farther-reaching decline to be catalyzed.
Bulls must break $11,200, as another rejection here would point to significant underlying weakness.
Analyst: BitMEX Open Interest Indicates a Short Squeeze is Imminent
In a recent tweet, one analyst observed that open interest for Bitcoin on BitMEX is beginning to find a floor and start climbing higher, with much of this growth coming about due to freshly opened short positions.
As such, he believes that a squeeze could be imminent in the near-term.
“Looks like Bitmex open interest is beginning to find a floor and trend upward. During this period we still have CVD making lows. Those that are hanging around opening up fresh short positions? Load the squeeze,” he said.
Image Courtesy of Cantering Clark. Chart from TradingView.
If a short squeeze does occur in the near-term, it could be just what Bitcoin needs to see some serious momentum in the days and weeks ahead.
Featured image from Unsplash. Charts from TradingView.