Bitcoin (BTC) just broke out of a giant falling wedge and has now started a bullish recovery. However, it has been rejected strongly at the 21 Day EMA and so far it does not seem to have the strength to break past it anytime soon. That being said, the sudden breakout yesterday took most bears by surprise. The rising bearish momentum is lost and the bears are looking to pull their money off the table and make a run for it. The whales on the other hand are not ready to let BTC/USD break past critical resistances without spilling some blood. So, it is unlikely that the price may break past the 21 Day EMA anytime soon. The bears will get lured in one last time with a false hope that this was a false breakout.
The whales always knock out reckless bulls or bears at turning points in a market. They have been doing it since time immemorial. Some may argue that it is a necessity that they have to do this in order to fill their large positions while having the liquidity to do so, without unnecessary slippage. However, I contend that there is a lot more to it than just a necessity to fill positions. The whales in this market are greedier than those we have seen in any other markets. Perhaps this is because they realize that most people in this space are first time traders with no prior experience. They are not privy to the schemes and tricks that the whales use to hunt down retail traders and steal their coins. This might sound a bit dramatic but if you discover the way they operate you will agree that this is exactly what happens.
Exchanges need liquidity and there are people who are happy to provide them with this. The way this works is that these people who are known as market makers buy the opposite side of the market trend. Let’s say we are in a bull market and the price is going up. If we all know the price is rising and we all want to buy, then who is going to sell us? This is where market makers step in. The only reason they are selling when the trend is on the buy side is because they know what they are doing. The way this works is that they sell when everyone else is buying.
When the buyers get too confident, they sell hard to hit their stops. Then they buy all the stops that they hit and start selling in small parts again to encourage further buying. These are the people who never lose in this market. The whole price action is in their hands. They get to choose which way the price goes. If we look at the daily chart for BTCUSDShorts and compare it to the daily chart for BTC/USD, we can see that both are struggling to get past the 21 Day EMA. Both of these charts point to the same conclusion. If the number of shorts falls before the 21 Day EMA, we can expect BTC/USD to rise before the 21 Day EMA and vice versa.