Santiment: Jumping Short Positions Is An Opportunity For Investors To Enter The Crypto Market

Santiment revealed opportunities for investors during the bear market. (Photo; Doc. Bitcoin Exchange Guide)

JAKARTA - In the midst of erratic crypto market movements, blockchain analytics platform Santiment provides an interesting view of potential opportunities for bullish investors. According to them, the spike in short positions in the crypto market opens the door for investors to prepare to anticipate price increases.

In a tweet released recently, Santiment highlighted a significant increase in the number of traders taking short positions as the market declines.

When many traders decide to fight market trends, the possibility of liquidation becomes even greater. In many cases, this could affect the price of these assets. Santiment explained that a signal like this is something bullish investors have been waiting for to take advantage of opportunities when prices have the potential to rise.

At the same time, it seems that the crypto market is indeed experiencing a decline. Data from CoinMarketCap reveals that the total crypto market capitalization has fallen by about 1.8% in the last 24 hours, reaching 1.13 trillion US dollars (approximately IDR 17.2 quadrillion).

Even the prices of bitcoin (BTC) and ethereum (ETH) have decreased by more than 2%, reaching around 28,500 US dollars (Rp436 million) and 1,700 US dollars (Rp26 million), respectively. Other crypto assets are also under pressure, with altcoins recorded a loss of up to 10% in the daily span.

The Right Time To Buy?

Santiment's analysis is in line with other findings from CryptoQuant, an on-chain intelligence firm, which noted a sharp increase in open interest in Ethereum in recent days. Open interest is an indicator that measures the number of long and short contracts that are currently active on various derivative exchanges.

Although this open interest indicator tracks both types of contracts, previous observations show that this figure tends to rise as crypto asset prices decline. Seeing this spike along with the decline in ETH prices, this is a strong indication that the spike in the short position in the futures market stems from traders predicting a decline.

The pattern that has been repeated over the past month reveals that the increase in open interest is often followed by opposing trends in the price of crypto assets and then a decrease in open interest.

In other words, this condition creates opportunities for bullish investors, who see these signs as the right time to enter the market and buy assets at lower prices.