Market Wrap: Bitcoin Steady at $7.5K as Short Sellers Back Off

Since Thursday’s jolt in bitcoin prices, the cryptocurrency has traded in a tight range close to the $7,500 level. It has not only come back from the losses suffered in March, it’s also showing some upward momentum. 

The price for one BTC is currently above 10-day and 50-moving averages on the daily charts, a bullish technical signal. “Despite the mid-March 2020 bitcoin sell-off when we saw a close to 50 percent drop, it has now, within a month, recovered 95 percent,” said Antoni Trenchev co-founder of crypto lender Nexo.

Daily trading on Coinbase for the past six months
Source: TradingView

Thursday’s jump in bitcoin price, briefly as high as $7,800 on some spot exchanges, hurt short sellers in the crypto derivatives market. Those trades betting on crypto prices going downward have not returned to derivatives exchanges like BitMEX, said Vishal Shah, an options trader and founder of exchange platform Alpha5. 

“What we saw yesterday was a collapse in open interest, and no real premium being built into the futures curve,” he told CoinDesk. As short sellers were wiped out on BitMEX Thursday during the bitcoin price spike, open interest dropped and it hasn’t recovered

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BitMEX open interest, the number of contracts or commitments outstanding, for bitcoin.
Source: Skew

“It’s tough for me to digest that there’s new capital funneling in; it’s likely capital within the ecosystem sloshing around and targeting pain points,” Shah added. “It feels pretty firm, with the next battle trench likely in the $7,850 – $8,000 region.”

Inflows are needed to push crypto prices higher. Bitcoin’s year-to-date high was $10,510 on spot exchanges like Coinbase back on Feb. 13 and more capital into crypto will be needed to push the markets higher. 

“Demand continues to be steady. You have to remember that for bitcoin to stay at these levels, you need inflows of new dollars matching supply of new coins,” said Daniel Masters, chairman of U.K.-based asset manager…

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