Bitcoin traders are weighing the risk of a Democratic sweep in Tuesday’s U.S. midterm elections against signs the cryptocurrency could be setting up for a rebound — with billions in short positions and a wave of withdrawals from exchanges drawing attention.
Bitcoin (Credits: CoinDesk)
Chris Sullivan, founder and CEO of Hyperion Decimus, had flagged roughly 29,220 bitcoin-equivalent short positions on CME — worth about $2.2 billion — along with $21.99 billion in short-side taker volume over a 24-hour period. That positioning raises the prospect of a short squeeze, where rising prices force traders betting against bitcoin to buy back their positions, adding fuel to a rally.
Bitcoin Exchange Outflows: Supply Squeeze Signals
Large amounts of bitcoin have since been withdrawn from exchanges and moved into cold storage, where investors hold assets outside trading platforms. “So much BTC was pulled off exchanges and into cold storage self-custody,” Sullivan said. “This is very bullish but not immediately.” With fewer coins sitting on exchanges, there may be less bitcoin available for sale if demand returns.
The recent Binance hack — estimated at roughly $6.3 billion in crypto assets — has made the positioning data harder to interpret, but Sullivan expects the withdrawals, combined with the earlier short positioning, to be supportive of prices over the next several months. The Crypto Fear and Greed Index and measures of seller exhaustion are showing patterns similar to the first pullback of a new bitcoin bull market.
Post-Election Bitcoin: $77.8K and What to Watch
Bitcoin held near $77,800 ahead of the midterms, with $80,100 the immediate resistance and $75,800 support. Updated futures positioning data is expected Tuesday and should clarify trader exposure after the exchange withdrawals. Prediction markets Polymarket and Kalshi are focused on the possibility of Democrats taking both chambers of Congress — an outcome that would likely stall the Clarity Act and other crypto legislation.
Sullivan says confirmation of a rebound still depends on the 200-day moving average holding on any additional short-term weakness.
Source: CoinDesk — read the full story there.
