Previous to this move the books were stacked to the short side, and still are.
Big boys will always go where the most money is for them.
What do i mean by that?
If I want to buy 20 million dollars worth of BTC at a certain price, then i need someone to be SELLING 20 million dollars worth of BTC at that same price. Otherwise you run the risk of “becoming the market” and essentially paying much more for your position than you would if there was more liquidity.
You have probably heard a lot of people talk about a “squeeze”, what that means is that when the books get too heavy to one side, liquidity starts to dry up, and big boys can’t position money like they want to. So they run the market the other way, and FAST.
What a squeeze does, is exit people out of their positions. Once a short is closed, it essentially becomes a long position and vice versa. This creates liquidity and allows for money to be positioned into the market again.
Now, there’s A LOT of volume in this move, and USUALLY, i’d see that as a bullish sign. But for the amount of volume we’re seeing, BTC isn’t really making THAT big of a move.
If you look at the last hourly candle that was printed, BTC put in a BIG wick with alot of volume, which essentially tells us that A LOT of money also got positioned to the short side.
Institutions don’t position all of their money at one level because like i said, they need enough liquidity to get all of that money into the market. So instead, they slowly build positions so that they don’t give away their hand.
As these levels are being broken, more and more retail traders are FOMOing into BTC which allows more and more traders to position substantial money to the short side.
If you look at BTCUSDSHORTS vs BTCUSDLONGS, there’s still more money positioned on the short side, on Bitfinex atleast.
BTC is in an unsustainable up move and doesn’t have any solid supports below, until about 5800. This is dangerous. If you don’t check levels on the way up, they’re much easier to break through on the way down.
If BTC gets a fast move down, this will again create a high liquidity environment and allow shorts to unwind and again, institutions to position to the long side.
On top of all of this, BTC has left behind massive amounts of orders to “square-up” at 4200. If you’re unfamiliar with a squareup, the short version is this:
When any financial instrument takes off fast it leaves behind a bunch of orders that market makers get stuck with, the market makers need to fix up their books by revisiting that level.
It is an extreme rarity for market makers to leave behind a “squareup”. This leads me to believe that at the very least, we’re going to revisit 4200.