Bitcoin’s upward trend in recent months has been historic, with bulls taking full control of the price action and sending it from a low of less than $ 10,000 in late summer to a high of $ 28,500 in just a few days ago.
After reaching these highs, the cryptocurrency’s upward trend has come to a halt, with recent days mostly consisting of consolidation as altcoins begin to gain some momentum.
The strength of this upward trend seems to indicate that the entire market could be well positioned to see continuation in the medium term. However, many analysts still believe that Bitcoin and other major altcoins will make a significant correction in the near term.
Until BTC hits the stage of its bull market where it really goes parabolic – placing significant moves higher on a daily or even hourly basis – it could still be prone to a major drop that clears overloaded long positions and its funding / premiums.
It appears hedge funds are counting on this opportunity as this number of investors on the CME is now shorter BTC than ever before.
Some of this pressure on the short side could be due to these groups hedging their cash positions, but the trend overwhelmingly suggests that they expect a major downward move in the near term.
Bitcoin consolidates as Altcoins gain momentum
At the time of writing, Bitcoin is trading just over 1% at the current price of $ 26,760. This is where it has been trading for the past few days.
Selling pressures in the USD 28,000 region have been quite intense and may continue to stunt growth in the medium term.
As it consolidates, altcoins such as Ethereum are gaining some ground against it, suggesting that an ongoing onslaught of sideways trading from BTC will trigger the next “altseason”.
Hedge funds are betting on a major BTC downturn
According to the latter Commitment of Traders (COT) report of the CME, hedge funds fall short in Bitcoin on a large scale.
They now have more short exposure to it BTC than ever before, indicating they are betting on a strong correction, as one data aggregator noted:
“December 21 – CME $ BTC Commitments of Traders (COT) report – Interest outstanding: 12,603 up 10.8% – Hedge funds net short new all-time high (likely cash and carry trades).”
Image Courtesy of Unfolded. Source: TradingView.
While hedge funds are in short supply, institutions, private investors, and professional traders all have a long-standing preference for Bitcoin.
Featured image from Unsplash. Charts from TradingView.