A recent wave of trading action related to bitcoin cash (BCH) resulted in traders who wagered against the prominent cryptocurrency experiencing the highest amount of loss in over two years. As detailed by Coinalyze data, shorts and longs concurrently parted ways with over $25 million on BCH-monitored futures. The culminating losses could have actually been the incentive driving the abrupt price surge to the $320 level.
In the world of trading, shorting refers to wagering against an asset, in anticipation of its value decreasing. Conversely, going long refers to betting on the rise of assets’ prices. Simplistically speaking, the more dominant group between longs and shorts often dictates market tendencies.
Eyeing into this week, funding rates for all exchanges listing BCH futures have plunged into the negative. This shift suggests that traders are primarily making bets against BCH. It further implies that these bearish traders are even ready to reimburse those bullish on BCH to remain steadfast in their long positions. Such a scenario indicates the escalating interest in shorting BCH and the rising funding rates, currently as high as -0.05% every 8 hours.
Through a perspective that introduces a bit of skepticism, concerns arise regarding these activities. For one, when an exchange forcibly closes a trader’s leverage position due to inadequate funds to maintain the trade open, it signals liquidation. Such occurrences can serve as portents of the local peak or trough of a steep price movement, a vital clue for traders to position themselves strategically.
The unexpected trading volumes surge last week can be ascribed to the intensified trading activities on South Korean exchanges and the inauguration of EDX Markets. The latter is a new crypto exchange platform backed by financial powerhouses like Fidelity Digital Assets, Charles Schwab, and Citadel Securities. This platform not only supports BCH but also includes other cryptocurrencies such as bitcoin (BTC), ether (ETH), and litecoin (LTC) in its listing. However, the Korean traders’ reputation for irrational fervor might have exaggerated the BCH price actions, leaving us questioning how sustainable these price levels could be.
Source: Coindesk
