According to data from one of the worlds largest crypto exchange ‘Bitfinex’, the amount of short orders placed on ETH/USD, the 2nd largest digital currency by market capitalisation, surpassed the previous benchmark of 202,854 to ultimately reach a new high of 208,689.
The new data figure represents more than 80 percent increase this week and a 162 % jump since mid-aug.
The development follows after an unfavourable week for the broader digital currency market and Ethereum particularly. The price of Ethereum fell from around $289.3 USD to $$220 USD following this week.
All around, the developments mark a total of more than 80% drop in the price of Ethereum comparing it to a all time high price of around $1200 USD, thus it’s maybe no surprise that people’s confidence in the digital currency seem to be fading at present times.
However, when short positions are stacked higher, a low increase in the value may cause those shorting to shut positions so as to avoid a losing trade. Since the only method to shut a short trade is to shop back the digital currency, it’s even possible that Ethereum may see a certain price hike, conjointly referred to as a “squeeze.”
Looking at the information from a special angle, its possible that one may create an argument that short and long market conditions are a lot of almost alike the November and December in 2017.
While the concept of a short squeeze is reassuring bulls, but it’s never a guarantee – and also the lack of technical support levels below ETH/USD has definitely provided benefit for the overcrowded trade.