Many investors were surprised by Bitcoin ‘s latest price action. Before that, and even during this move higher, a significant number of investors were short Bitcoin via future contracts. This was shown by Bitcoin ‘s negative funding rates, which shows that there are aggressive shorter sellers in action.
This skepticism about BTC’s price action has persisted, even as $13,500 holds and the market steadies.
One crypto-asset trader recently said that he thinks that bitcoin ‘s recent thrust is higher when futures are closed, indicating that a pullback might begin. This is linked to the CME futures gap hypothesis, which implies that any strong rally or decline that BTC sees on the weekend is traced back to CME futures traders: “I think bitcoin is putting in a temporary top. Price action to the upside when futures are closed gives me further indication that we’ll see a continued pullback into the election.”
Another trader said that he thinks there is a confluence of three or four reasons why Bitcoin may be at a peak here. They are as follows:
- Bitcoin has undergone three “drives-ish” into a major resistance level, the $14,000 macro resistance.
- Stocks have dropped massively over the past week in the face of pandemic uncertainty.
- The election on Tuesday could further compress returns as there is also political uncertainty.
- The Dollar Index (U.S. Dollar) is at a support level, and could bounce to suppress gold and Bitcoin.