How does the concept of shorts covering apply to the cryptocurrency market?

1 answers

• Dec 26, 2021 · 3 years ago
  Shorts covering is a concept that applies to the cryptocurrency market when traders who have previously sold short a cryptocurrency start buying it back to close their positions. This can happen when the price of the cryptocurrency starts to rise, and traders want to limit their potential losses. By buying back the cryptocurrency, they effectively close their short positions and exit the market. This can create a buying pressure in the market, leading to a further increase in price. Shorts covering is an important phenomenon to consider when analyzing market dynamics in the cryptocurrency market, as it can indicate a shift in sentiment and potentially contribute to a bullish trend. It's important to note that shorts covering is just one factor among many that can influence the price movements in the cryptocurrency market.
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