Bitcoin’s (BTC) “consecutive long squeeze” could explain the asset’s recent decline
A “consecutive long squeeze” in Bitcoin (BTC) could explain the asset’s recent fall to its 53-day low as miners continue to sell, according to a Bitcoin analyst.
“Speculators continued to add new long positions, which only fueled more liquidations in a cascading long squeeze,” wrote a pseudonymous Bitcoin analyst, Willy Wu, in a June 24 article.
A long squeeze occurs when a large number of investors with long positions (those betting on the price of Bitcoin to rise) begin to sell their holdings as the price falls to reduce their losses. This causes the price to fall further, causing a cascading effect on other long position holders.
The opposite is called a short squeeze, a term that became known when retail traders drove up the price of GameStop shares in January 2021, forcing large short investors to repurchase the shares at a higher price to limit their losses and thus push the market. stock price to skyrocketing heights.
According to CoinGlass data, a drop below $60,000, like the one that occurred on June 24 when Bitcoin fell below $59,000, would wipe out $1.16 billion in long positions. However, a similar 3.73% rise would eliminate $2.18 billion in short positions, showing that traders currently have more confidence in the downward price trend.
“It’s worth detailing what’s happening given the fear in the market,” Wu added.
This comes as the Cryptocurrency Fear and Greed Index – which measures market sentiment towards Bitcoin and the wider cryptocurrency industry – fell to its lowest score in almost 18 months.
Miners continue to surrender after the halving
Wu also highlighted the ongoing event of “miner capitulation after halving,” a theory that miners will turn off their machines and sell their coins if the price of Bitcoin falls below a certain price and the mining becomes unprofitable.
“On top of this liquidation pressure, we have miners capitulating after the halving,” Wu said, explaining that miners selling Bitcoin can pay for necessary upgrades while weaker miners close shop and are liquidated.
about: Bitcoin analysts expect the BTC price to fall to $50,000 before the parabolic trajectory begins.
On June 25, Bitcoin was trading just above the crucial $60,000 level, at $61,320 at press time, according to CoinMarketCap data.
On June 24, Bitcoin saw its biggest daily decline in over three months, falling 6.26% to $58,890, according to a cryptocurrency commentator named Bitcoin Archive.
“Biggest daily price discount in 97 days,” they wrote on June 24.
Samson Mo, CEO of JAN3, believes that “the decline of Bitcoin is just emotion and fear, not the sale of large stakes.”
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.
