Bitcoin Drops 2% as Bitfinex Long Positions Decline

Bitcoin's price has experienced significant corrections recently after reaching a new all-time high last week. This performance indicates a potential exhaustion of bullish momentum, as the overall market faced downward pressure in the final week of May. The ongoing struggle between bulls and bears makes it challenging to predict the next move for Bitcoin's price. However, recent on-chain observations reveal increased bullish activity on a popular centralized exchange, which could provide insights into the short-term movement of the market leader.

Crypto analytics firm Alphractal recently analyzed the relationship between leveraged long positions on the crypto exchange Bitfinex and Bitcoin's price direction. This analysis is based on the Bitfinex Long Vs. Short Position metric, which estimates the ratio of buys against sells of Bitcoin. According to Alphractal, the relationship between Bitcoin's price trajectory and the leveraged long positions on Bitfinex is inversely proportional. This means that an increase in long positions on the exchange could lead to a price drop, while a decrease in long positions could be bullish for Bitcoin's price. This pattern is attributed to traders' tendency to be wrong about the market's actual trajectory, leading to liquidations and forced position closures that drive Bitcoin's price in the opposite direction.

Alphractal's recent post on the social media platform X highlighted that the Bitfinex Long Position is declining. If this trend continues, Bitcoin could resume its upward run. Conversely, if the metric were to rise above its current level, Bitcoin's price could be preparing for a severe pullback. As of the latest update, Bitcoin is trading just above $104,100, reflecting a more than 2% decline in the past 24 hours. On the weekly timeframe, the flagship cryptocurrency has lost over 4% of its value in the past seven days, indicating a disappointing performance. The price of Bitcoin has dropped beneath the $104,000 level on the daily timeframe, adding to the bearish sentiment in the market.