What You Need to Know:
- The number of leveraged Bitcoin long positions on Bitfinex has plunged to its lowest levels since December, indicating a potential bullish upturn for Bitcoin.
- In financial markets, contrary indicators are frequently misleading, hinting at movements contrary to their superficial implications.
- Historically, rises in Bitfinex long positions have correlated with drops in Bitcoin prices, whereas decreases appear to align with price rebounds.
Those familiar with financial markets may recognize the concept of contrary indicators. These indicators often create confusion; some, while they seem positive, can portend market downturns, whereas others that may appear negative might actually signal price increases.
One such contrary indicator is the leveraged Bitcoin longs on Bitfinex. Historically, these positions have decreased during bullish trends and increased during bearish phases.
As of now, the BTCUSD longs on Bitfinex sit at 47,691, the lowest since December, signaling bullish tendencies for Bitcoin, based on TradingView data. The peak of long positions occurred in the first half of April, followed by a decline as Bitcoin soared from around $75K to unprecedented highs exceeding $110K.
“When long positions drop, the price typically tends to rise,” said Alphractal on X. Translation: „Cuando las posiciones largas disminuyen, el precio suele aumentar.“
Alphractal explains that traders often misjudge the market’s direction, resulting in either forced or voluntary liquidations that push the price in the opposite way.
“As long as long positions continue to decrease, Bitcoin will persist in climbing,” stated João Wedson, CEO of Alphractal. Translation: „Mientras las posiciones largas sigan disminuyendo, Bitcoin continuará subiendo.“
The accompanying chart illustrates the contradictory behavior of BTCUSD longs on Bitfinex.
Since 2021, each major Bitcoin rally, including those from November-December last year and the recent surge from early April, has coincided with a drop in BTCUSD longs on the exchange. Conversely, all declining trends for Bitcoin, including the 2022 crash and the recent fall from $100K to $75K this year, occurred during periods of increasing BTC/USD longs.
