After an agonizing period in the first half of 2020, the traditional asset class began to show a come back to the markets. Doubts over an imminent recession have begun to fade as Dow Jones and S&P 500 have registered consecutive gains over the last two weeks. After setting a new record of three straight positive weeks, NASDAQ also showed persistence in the market.
On the other hand, some investors were starting to lose the plot with bitcoin. Since the beginning of June, the largest digital asset has been stuck in the range of $8800 to $9500, and with traditional markets rising, traders have been looking at the option of shorting bitcoin.
The charts did not suggest a different scenario either.
The 1-day chart of Bitcoin epitomizes the concerns of traders as it pictured towards an unnerving bearish future. The formation of a descending triangle will not win any favors for Bitcoin from the investors, as a bearish dropped seemed increasingly likely towards the end of July. The support at $8879 has been held strongly over the past month and any breach below that level may wreak havoc for the asset.
In spite of such strong concerns, Jay Hao, CEO of OKEx Exchange believed that traders should have more faith in Bitcoin and not short on the asset over the near future.
Speaking about the current conundrum, Hao admitted that the downturn in Bitcoin spot and futures trading volume inclined towards the decision of shorting Bitcoin.
However, he revealed that in spite of low trading volume, Bitcoin OTC trading has been consistent. He said,
“Data from Coin.dance shows that volume on the two major OTC trading platforms, Paxful and Localbitcoins, has not decreased significantly. Even on Paxful, due to the impact of the epidemic and the fluctuation of the fiat currency Exrates, the OTC trading volume has increased significantly.”
Hao added that example of other factors as well, which include steady Bitcoin transaction count during the downturn over the past couple of months.
So Is it the right time to short Bitcoin?
Rise in the stock market will definitely take capital away from crypto investments as investors would like to opt for a more stable investment vehicle. However, it is important to understand that the recovery period will be registered by Bitcoin as well, sooner or later.
Now, keeping patience with Bitcoin may be tough when the traditional market is performing better, but it’s important to understand that a shift in momentum can surface at any time. Hence, the shorting of Bitcoin may not be the best step forward at this time, since the digital asset does not show signs of extreme adversity at all; at least not yet.