Are you curious why the price of bitcoin dropped and then popped the last few days?
It really comes down to a couple things most likely:
Futures Expiration
High Short Interest.
Don't believe me?
Lets go to the charts...
Futures Expiration.
This is a chart of what happens to the price of bitcoin on average around the CBOE Futures Contracts Expiration:
(Source: https://cryptocoinreport.net/reasons-behind-the-crypto-bear-market/)
As you can see, prices tend to be quite weak on average during the 7 days leading into expiration.
Then, prices often rebound rather significantly during the 7 days after expiration.
Futures Expiration was yesterday, August 15th, by the way.
Now, this could all be coincidence, but thus far the numbers certainly point to a pattern taking place.
Another contributing factor is likely the high short interest.
Check out this chart from CNBC of the short interest listed on Bitfinex:
As you can see, the last time short interest was near these levels, the price of bitcoin reversed its downtrend and rallied roughly 50%.
Will history repeat?
I have no idea, but the setup is there for a nice move up over the next few days.
Based on the numbers and the charts listed above, the best move by traders would be to buy bitcoin about 5 days before futures expiration, and then sell it 6 days after expiration.
Stay informed my friends.
