Bitcoin continues to face pressure in the daily chart, with no relief in sight at current spot rates. Following a flash crash on June 6, prices sharply reversed from the $72,000 level, emphasizing the significance of the liquidation level. Analysts anticipate a potential short squeeze once this level is breached, as Bitcoin has historically recoiled from it.
Hedge funds and Wall Street firms have been increasingly taking short positions on Bitcoin futures contracts, expecting prices to drop. While they may be net long on the spot market to exploit fee differentials, this strategy is risky and could result in significant losses if prices unexpectedly spike. Currently, there are approximately $12 billion worth of short positions on BTC futures between the current price and slightly above all-time highs at $74,000.
Despite the popularity of hedging tactics in traditional finance, Bitcoin being a new asset class outside the traditional system introduces uncertainty. This could lead to unexpected outcomes and substantial losses for those shorting Bitcoin futures.
Bitcoin’s price remains fragile, dropping from $72,000 and facing selling pressure. Buyers are yet to recover from the June 6 losses, indicating a southward trend in the short term. A breach below $66,000 could erase gains from May 20, signaling a shift in trend.
On a positive note, all spot Bitcoin exchange-traded fund (ETF) issuers in the US have been actively buying despite market contraction. In the first week of June, they added 25,729 Bitcoin, equivalent to about two months’ worth of mined coins. This buying activity is the highest since mid-March, coinciding with BTC reaching all-time highs around $73,800.