Bitcoin’s current instability is shaking investors’ confidence in a potential relief rally, as the short positions against Bitcoin are climbing as long positions continue to drop. Bitcoin moved slightly lower on Tuesday morning, leading the majority of altcoins to also drop.
Currently, the overall cryptocurrency market is sitting at just over $107 billion, and one more major drop led by Bitcoin will likely bring it down to below the important psychological level of $100 billion, which has not been seen since July of 2017.
Bitcoin Drops as Number of Short Positions Climb
At the time of writing, Bitcoin is trading down 3% at its current price of $3,400, falling from daily highs of over $3,500. Bitcoin is currently trading down 15% from its 7-day highs of nearly $4,000, and the lack of investor confidence in either a relief rally, or an end-of-year rally, is clearly declining, as illustrated by the statistics regarding the amount of net-long and net-short positions.
According to data compiled by DailyFX, traders are continuing to shift their positions from net-long to net-short, signaling that they expect further drops to be on the way.
“Retail trader data shows 70.1% of traders are net-long with the ratio of traders long to short at 2.35 to 1. The percentage of traders net-long is now its lowest since Nov. 28 when bitcoin traded near $4,200.66. The number of traders net-long is 1.6% lower than yesterday and 2.7% lower from last week, while the number of traders net-short is 14.0% higher than yesterday and 21.4% higher from last week.”
It is important to note that net-short to net-long ratios simply give the markets insight into the sentiment amongst traders and is not a reliable method for determining the future direction a specific asset or market is heading.
Altcoins Continue to Drop
Bitcoin’s current instability has continued to be a negative thing for the altcoin markets, with most major cryptocurrencies trading down 3% or more at the time of writing.
XRP is one of today’s best performing altcoins and continues to respect the $0.30 region as a level of support. At the time of writing, XRP is trading down just over 1% at its current price of approximately $0.30.
Today’s drop has led Ethereum to fall below the $90 mark, and it is currently trading down 3.6% at its current price of $88. Ethereum is sitting 6% over its recently established 2018 low of $83 and is trading down over 20% from its 7-day highs of $111.
IOTA (MIOTA) is one of today’s worst performing cryptocurrencies and is currently trading down nearly 12% at its current price of $0.22. IOTA has experienced choppy trading over the past couple of days, sharply rising to over $0.26 yesterday before quickly falling back to $0.23 and continuing its decline into Tuesday.
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