Bitcoin’s upward trend over the past few months has been historic. The bulls took full control of its price action, sending it from lows below $ 10,000 in late summer to highs of $ 28,500 a few days ago.
After hitting these highs, the cryptocurrency uptrend came to a halt, with the last few days being mostly consolidation as altcoins regain momentum.
The strength of this uptrend seems to suggest that the entire market may be well positioned to see continuation over the medium term. However, many analysts still believe that Bitcoin and other major altcoins will see a sizable correction in the short term.
Until BTC gets to the stage of its bull market where it gets really parabolic – seeing sizeable moves daily or even hourly – it could still see a sharp decline that will remove over-leveraged longs and reset its funding / premiums.
It seems that hedge funds are betting on this option as this group of investors in the CME at BTC is now shorter than ever.
Some of this short-term pressures could be due to these groups hedging their spot holdings, but the trend largely suggests that they expect a large move lower in the short term.
Bitcoin consolidates when altcoins gain momentum
At the time of writing, Bitcoin is trading a little over 1% at its current price of $ 26,760. Here has been trading in the last few days.
Selling pressure in the $ 28,000 region has been quite high and could hinder growth in the medium term.
As it consolidates, altcoins like Ethereum are gaining some ground, which could suggest that sustained sideways trading in BTC will trigger the next “off-season”.
Hedge funds are betting on a large BTC pullback
According to the latest Commitment of Traders (COT) report from the CME, hedge funds have left Bitcoin far behind.
They are now exposed to BTC for less than ever, which indicates they are betting on a strong correction, a data aggregator noted:
“December 21 – Report on CME $ BTC Commitments from Traders (COT) – Open Interest: 12,603 plus 10.8% – Hedge Fund Net Short New All-Time High (likely cash and carry trades).”
Image courtesy of Unfolded. Source: TradingView.
While hedge funds are short, institutions, retail investors, and professional traders have a long bias towards Bitcoin.
Featured image from Unsplash. TradingView charts.