Bitcoin Cash Offers An Opportunity For Short Sellers, But Does The Risk Justify It

Disclaimer: The information presented does not constitute financial, investment, trading or other advice and represents the opinion of the author only.

  • The market structure was bearish on the 12-hour time frame
  • Combined with the technical indicators, a rally seemed unlikely

Volatility is an absolute necessity for traders. Investors may dislike or fear volatility, but traders, especially those with short timeframes, tend to profit from it. However, volume in the crypto markets has dried up in recent days as the festive season sets in.


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Bitcoin Cash formed a block of bearish orders and was repeatedly rejected over the past week. A move higher to collect cash from eager short sellers could jeopardize traders already positioned on the downside. Bitcoin is also facing stiff opposition near the $17.3,000 mark.

Hidden bearish divergence signals continuation of downtrend

Source: BCH/USDT on TradingView

In early November, following the panic around the FTX implosion, Bitcoin Cash fell from $126 to $87. Fibonacci retracement levels have been plotted (yellow) based on this movement. The subsequent rally from $87 was halted at the 78.6% retracement level at $117.7 on November 24.

Since then, the price has been in a downtrend. It shifted to a bearish pattern after falling from $108.9 to $106.1 on December 11. For most of December, the Relative Strength Index (RSI) has also been below neutral momentum of 50 to show that the bears have the upper hand.

The Chaikin Money Flow (CMF) was unable to break above the levels of +0.05 or -0.05, and therefore did not indicate any significant flows of money into or out of the market over the past few years. weeks.


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The RSI has also formed a hidden bearish divergence (orange) with the price. Given that the trend was down, this suggested that short sellers may once again be interested.

The bearish H12 order block around $102 (marked in red) was likely to reject any bullish attempts. Therefore, a short position can be taken, with a stop-loss above $104 and targeting the $96-$97.5 support region.

Cumulative Spot Volume Delta Showed Sellers in Control

Bitcoin Cash has a bearish structure and sellers remain dominant

Source: Coinanalysis

From December 13, prices and open interest followed a downward trend. This showed that long positions were discouraged and futures market participants had a bearish bias. The CVD spot has also been in freefall since the end of November.

Taken together, we can deduce that the selling pressure was immense and may continue to be so as we approach the new year. For Bitcoin Cash to break the bearish shackles, it will need to reclaim the $104 area as support and rise with the rising OI to signal bullish strength.

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