Since SHIB price hit the $0.00001 local top on Aug 12, Shiba Inu Inverse Strategy traders have been on a rare winning streak. An in-depth analysis of the Shiba Inu derivatives market data shows that the bears are not letting off.
Inverse traders, short traders, are investors deploying trading strategies to profit from falling prices of a particular asset. Over the past month, Shiba Inu inverse traders have scored millions in profits, and current data shows that they are actively positioning for more gains.
Bears Have Dominated The SHIB Futures Markets Since Mid-August
Shiba Inu price hit a 3-month peak on Aug 12. But since then, inverse traders have been on a winning streak, according to stats from Coinglass —a crypto derivatives data aggregator.
Over the last 30 trading days, the chart below illustrates the number of Long positions liquidated have exceeded Shorts in 20 days. This means that the bears have achieved a 67% dominance between Aug 7 and Sept.
How Shiba Inu (SHIB) Inverse Traders Make Profits | Trade Liquidations, Sept 2023. Source: Coinglass
In the Futures markets, traders borrow and sell assets (like stocks or cryptocurrencies) with the expectation that the asset’s price will in increase or decrease. They aim to buy back the assets in the future, return them to the lender, and pocket the price difference as profit.
Those who bet on a price increase are said to take a “Long” position, while those angling for a price drop open a “Short” position.
Hence, a Long Liquidation event is triggered when the asset’s price falls rapidly, resulting in losses that exceed the value of collateral or ‘margin’ put up by the trader.
Notably, there have been $1.04 million Long Liquidations since Aug 31, which is significantly higher than $254,000 Shorts Liquidated. This shows that Short trading remains the dominant and most profitable trading strategy in the SHIB Futures markets.
Such large liquidations within a short period raise the of a Long squeeze. A “long squeeze” is a market situation in which prices rapidly decline, causing investors who hold long (buy) positions to sell their assets to cut losses or meet margin requirements.
This could potentially exacerbate SHIB price decline in the coming days unless there’s a significant shift in broader market sentiment.
Increasing Capital Inflows Suggests that Short Traders Are Not Letting Off
Typically, when an asset’s price declines, investors shift capital away. However, a contrarian trend has emerged in the SHIB Futures markets this week.
Between Sept 2 and Sept 8, SHIB Open Interest has increased by $1.8 million. Meanwhile, the chart below depicts that SHIB price has declined by another 4% during that period.
How Shiba Inu (SHIB) Inverse Traders Make Profits | Open Interest, Sept 2023. Source: Coinglass
Open Interest sums up the total value of active derivatives/futures contracts for an asset. Typically, uptrend in Open Interest is a bullish signal, indicating increased capital inflows.
However, given the prevailing liquidations ratio, a rising Open Interest during a month-long SHIB price downtrend implies that inverse traders are entering more short positions, adding to existing ones.
In conclusion, the negative divergence between capital inflows and the current SHIB price trend suggests that Shiba Inu inverse traders want to expand their profits.
SHIB Price Prediction: Potential Long Squeeze to $0.000006
The current dynamics in the derivatives markets suggest that SHIB inverse traders could push the price below $0.000007. The Global In/Out of the Money (GIOM) data depicts the entry price distribution of the current SHIB holders.
Notably, it shows that 82,710 addresses had bought 28.15 trillion SHIB at the average price of $0.000008.
However, after nearly a month of Short trading profits, SHIB is now on the verge of losing that support. And if that support caves, as predicted, the SHIB bears could push for a price reversal toward $0.000005
Shiba Inu (SHIB) Price Prediction, Sept 2023. Source: IntoTheBlock
Still, the bulls could attempt to regain control if SHIB price can soar above $0.000014. However, the resistance level around $0.000010 poses a significant obstacle. As shown above, 418,430 addresses had bought 293.14 trillion SHIB tokens at the average price of $0.000010.
If the sell early, SHIB price could surrender to another bearish reversal. But if that resistance level caves, then SHIB could reclaim $0.000014.
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