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Bitcoin Traders Are Actively Opening Short Positions Following 20% Market Correction

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Fri, 11/19/2021 - 14:13
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Arman Shirinyan
While Bitcoin and the crypto market overall retraces, some experts are not worried because a correction was expected after a 60% run
Bitcoin Traders Are Actively Opening Short Positions Following 20% Market Correction
Cover image via stock.adobe.com

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Bitcoin's 13% correction did not go unnoticed by traders, and most of them have started to open short positions that allow them to make a profit from an asset that loses its value.

According to the indicator provided by the CryptoQuant CEO, the derivatives market faced an increasing sell (short) order volume after Bitcoin faced a retrace on the market. The main reason for this is more likely tied to changed sentiment on the market.

Correction was inevitable

Senior market analyst at Oanda Craig Erlam stated that the Bitcoin correction was an expected event that should have happened sooner or later, especially after the cryptocurrency rallied by around 66% in the last few months and even more since the beginning of the year.

Bloomberg Chart
Source: Bloomberg

Most analysts agree that Bitcoin has no other choice but to enter the distribution phase of a cycle and slow down just a bit. A break to $50,000 is possible, but not crucial, compared to the size of the rally that the market had in recent months.

Market sentiment

Following the increase in volatility on the market, sentiment indicators like the fear and greed index have come closer to the "fear" and "extreme fear" values, which indicate that the market's reaction is far greater than the actual price movement.

Fear and Greed Index
Source: Fear & Greed Index

Previously, a minor correction on the market that started in May resulted in a full 50% retrace to $28,000 due to the overleveraged market and a strong sentiment switch, which was fueled by the industry crackdown that began in China.

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At press time, Bitcoin is trading at $57,500 with a slight recovery from the $55,000 area. Even though the cryptocurrency managed to recover 2%, the market remains bearish with more than 12% loss this week.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.