The Bitcoin price has witnessed its fair share of corrections in recent days after reaching a new all-time high last week. The premier cryptocurrency’s latest performance reflects what seems to be an exhaustion of bullish strength, as the general market fell under some downward pressure in May’s final week.
With the ongoing battle between the bulls and bears, there is no clear-cut way to tell what’s next for the Bitcoin price. However, a recent on-chain observation shows increased bullish activity on a popular centralized exchange, which could offer insight into the short-term movement of the market leader.
‘Decreased Bitfinex Longs May Be Good For BTC’s Momentum’ — Alphractal
In a May 30 post on social media platform X, crypto analytics firm Alphractal delved into the relationship between leveraged long positions on crypto exchange Bitfinex and the Bitcoin price direction. This analysis is based on the Bitfinex Long Vs. Short Position metric, which estimates the ratio of buys against the sells of a cryptocurrency (BTC, in this case).
According to Alphractal, the relationship between BTC’s price trajectory and the leveraged long positions on Bitfinex is inversely proportional. This means that if there are more long positions on the crypto trading platform, the likelihood of a price drop increases. Meanwhile, a decrease in long positions on the exchange could be bullish for the Bitcoin price.
The analytics firm attributed this pattern to the propensity of traders to be wrong about the market’s actual trajectory. According to Alpractal, these wrong price predictions eventually lead to liquidations and forced position closures, which drive the BTC’s price in the opposite direction.
The chart above shows a decline in long positions and a low volume of short positions | Source: @Alphractal on X
In the recent post on X, Alphractal pointed out that the Bitfinex Long Position is declining, and if this trend is sustained, the premier cryptocurrency could resume its upward run. On the flip side, if the metric were to ascend above its current level, the Bitcoin price could be preparing for a severe pullback.
Bitcoin Price At A Glance
As of press time, Bitcoin trades just above $104,100, reflecting a more than 2% decline in the past 24 hours. The flagship cryptocurrency’s performance is even more disappointing on the weekly timeframe, having lost over 4% of its value in the past seven days.
The price of BTC drops beneath the $104,000 level on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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