The price of Bitcoin whipsawed yesterday, dropping to almost $6,000 before bouncing to over $6,400 in less than two hours. What happened?
As noted by Forbes, the volatile price action is likely an automated and preparatory move as short sellers pile on ahead of the U.S. Securities and Exchange Commission’s expected denial of the high-profile VanEck SolidX Bitcoin exchange-traded fund (ETF).
The much-watched ETF proposal, if approved, would open the doors to a whole new market of investors looking to get involved with the cryptocurrency market leader. However, investors are currently betting that the pipe dream will be shut down.
Watch Me Whip
When sell orders and short positions stack up to levels near their all-time high, automated trading bots can create whipsaw patterns, as seen below:
These patterns, of course, wreak havoc on weak-handed or inexperienced day-traders.
In this case, holders who weathered the whipsaw came out on top.
The fact that traders are betting on Bitcoin (BTC) to break through the key resistance zone around $6,000 following an ETF denial can be clearly illustrated by the sheer amount of short orders in the market today.
As illustrated in the chart below, BTC/USD shorts still remain near their all-time high.
The trend isn’t particularly new, either.
As noted by Forbes, September 1 saw a 10,000 bitcoin short position opened.
However, it is still worth noting that the phrase ‘what comes up, must come down’ applies here as well. When short orders are hanging out at such high levels, the opportunity for big money traders to short squeeze the bears dangles out in front like a carrot.
What do you think of Bitcoin’s whipsaw pattern yesterday? Do you think the VanEck SolidX ETF will be denied? Let us know your thoughts in the comments below!
[Disclaimer: This article is not intended as financial advice, and should not be taken as such. Neither the author nor BeInCrypto is responsible for any financial gains or losses from any readers of this article.]