An exchange-traded product that shorts Bitcoin (BTC) hit an over two-month high on Friday, as the world’s largest crypto led a sharp decline in the market.
The 21Shares Short Bitcoin ETP, which trades exactly opposite to BTC, jumped 5.4% in the past two days to its highest level since late-February. This followed a 11% slump in BTC over the same period, which saw the token hit its lowest level since the onset of the Russia-Ukraine war.
Short BTC ETP surges in value this year
The short BTC ETP, which trades on European stock exchanges, is one of the best performing assets this year. The ETP is currently trading up nearly 8% for the year, far better than returns offered by most of the top-50 cryptocurrencies.
21Shares describes the ETP as seeking to provide a “-1x return to the performance of Bitcoin for a single day.” The ETP achieves this by borrowing BTC and simultaneously selling it.
But the product is also billed as high risk by the asset manager. 21Shares recommends the product only for investors willing to take on the risk of such an endeavor.
21Shares offers a slew of ETPs tracking different cryptocurrencies. The fund manager recently launched a product that hedges both BTC and Gold in one product.
Bitcoin short interest hits near 2-mth high
A Bitfinex index that tracks short interest in BTC shows that bearish positions on the token are at their highest since mid-March. The reading comes on the heels of one of BTC’s worst tumbles this year.
The token is now trading near its lowest levels this year, between $35,000 to $36,000. Traders are anticipating further losses in the token, as inflation and monetary tightening fears show little signs of easing.
The U.S. Federal Reserve hiked interest rates this week, as did central banks in the UK, Australia, and India. Several more banks have flagged tightening measures to combat a recent surge in inflation.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Bitcoin’s (BTC) abrupt tumble from 2022 highs caused a string of large liquidations in the market. Big long positions- which expected the token to find a bottom- saw some of their biggest liquidations this year.
BTC fell from near $48,000- its highest level this year- to $42,400 in little over a week. The token’s sharp decline is attributed to growing concerns over inflationary pressures this year, as well as aggressive measures from the Federal Reserve to curb prices.
Weakness in the token also spilled over to the broader crypto market, bringing total market capitalization back below $2 trillion by Saturday.
Highest number of BTC longs liquidated since January
BTC’s tumble below $45,000- which was considered a key support level- saw the highest number of long positions liquidated since mid-January. Data from Coinglass showed over $101 million in long positions were liquidated on Wednesday, when the token fell below the support level.
About $222 million of long positions were liquidated over the past six days. The data showed that a large number of traders betting on more BTC gains were blindsided by the token’s fall.
Even coming into Saturday, which usually sees low trading volumes in crypto, BTC longs were being liquidated at a large scale. 73% of the $64 million BTC positions liquidated in the past 24 hours were long.
Where will BTC go next?
BTC’s sharp fall has markets uncertain over where the token will go next. A worst-case scenario would be the token testing 2022 lows, at $33,000. The token also appeared to be weakening ahead of a halving event on April 11, which will see mining rewards cut by 50%.
Technical indicators and whale activity show that the token could see big gains in the coming weeks. But sentiment is till largely cautious. The BTC fear and greed index is now back in fear territory, after spending the past two weeks at neutral.
The token could also perform better as institutional buying into crypto picks up this year.
Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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