Bitcoin price is still up, trading close to $ 33,000 and is in a downtrend that seems to be getting worse every day. As prices fell, analysts consulted a number of technical and on-chain indicators to explain the drop in prices, but none of them identified the exact reason.

One area of ​​interest is the sharp rise in Bitfinex’s short positions over the past week. Traders attach undue importance to these Bitcoin (BTC) margin shorts, as if they were predictions of the current market crash. However, as previously reported by Cointelegraph, analysts forget that Bitcoin’s margin length is often much larger.

How #Bitcoin As we slowly bleed into the lower range (30-32K) we can see the Bitfinex mega shorts slowly close slowly
There are still large shorts open, but half of them are closed
Keep an eye out for this Finex whale that was a key factor in the May 19th crash$ BTC pic.twitter.com/c4qeb6Nxe3

– Feras_Crypto (@ FeraSY1) June 20, 2021

On June 18, the number of buy transactions was at least 22,800 BTC more than Bitfinex’s short trading volume, but by June 22, 87% of the short positions had been closed. Currently, the fund’s signed trades are 43,850 BTC longer than the amount sold.

While these short sellers are usually savvy traders, it is unlikely that they knew beforehand that Chinese banks would prevent their customers from engaging in trading or mining activities.

More importantly, those bearish positions were built while MicroStrategy bought $ 500 million in Bitcoin after a successful private offer with a high profile security advisory. To make matters worse, Michael Saylor’s business intelligence firm announced it would raise an additional $ 1 billion by selling shares to buy Bitcoin.

Let’s see how these bold shorts got popular.

On June 6, the shorts rose from 1,380 to 6,700, with an average price of $ 36,150. Another 12,180 shorts were added three days later when Bitcoin was trading at $ 37,050. Eventually, the shorts rose 6,000 between June 14 and 15, to a high of 25,000, while Bitcoin averaged $ 40,100.

Looking at the Bitcoin price when these brief rallies took place, it is reasonable to assume that the 23,500 contract wins (green circle) have an average price of $ 37,625.

Connected: Traders are looking for bearish signals after Bitcoin futures pulled back

Traders closed positions before BTC fell to $ 32,000

These short positions have been steadily closed for the past three days as Bitcoin traded below $ 37,000. However, 17,000 short contracts were closed when the price fell below $ 33,500. So it’s incredible that the average price is under $ 34,500.

Nobody can complain about an 8% increase selling the market short for a profit of $ 73 million. It should be noted, however, that on June 16, when Bitcoin hit $ 40,400, these shorts were underwater for $ 65 million.

This analysis shows how even highly professional traders can go deep underwater. There’s no way to tell if this trade will be profitable if crackdown on China doesn’t make Bitcoin price worse, or if MicroStrategy manages to raise $ 1 billion before the price drops.

If anyone still believes in market manipulation, it can at least be comforting to know that professional traders also face serious losses. However, unlike us humans, whales have deep pockets and the patience to withstand even the toughest thunderstorms.

The views and opinions expressed here are those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement carries risks. You should do your own research when making a decision.