There seems to be no end in sight for the sell-off in ether markets, as the number of short orders placed on the second-largest cryptocurrency by market capitalization hit a fresh record high on Wednesday.
The ETH/USD shorts on Bitfinex exchange clocked a new high of 248,247, beating the previous record high of 247,611 set last Friday. Looking at the data from a different angle, these bearish bets have risen by more than 200 percent in the past four weeks.
The extreme negative positioning – as seen in the chart above – usually results in a sharp move on the opposite side, popularly known as “short squeeze“. Further, the stage looks set for profit taking (unwinding of shorts) as the cryptocurrency is looking extremely oversold as per the relative strength index (RSI).
However, the ether market is showing no signs of bearish exhaustion. This is evident from the fact that ETH found acceptance below $200 after shorts rose to lifetime highs on Friday. Further, prices hit a 13-month low of $167 today in accordance with the rise in the bearish bets to new highs.
So, it seems safe to say that the bearish sentiment is quite strong and the unwinding of shorts will likely gather pace only if bitcoin, the world’s largest cryptocurrency by market capitalization, picks up a bid as anticipated by technical charts.
However, if BTC dips below $6,000, then the ETH bears could continue to boost short positions to fresh record highs, accentuating the rout.
At press time, ETH is trading above $171 on Bifinex.
Disclosure: The author holds no cryptocurrency assets at the time of writing.