Bitcoin Short Squeeze Looms as Price Nears $71K
This post was originally published on cryptonewsfarm.com
Bitcoin Short Squeeze Looms as Price Nears $71,000
A rapid price recovery for Bitcoin could trigger a significant short squeeze, potentially liquidating over $1 billion worth of bearish bets.
On June 7th, Bitcoin (BTC) experienced a price drop of 3.33%, dipping to $68,507. This decline coincided with broader economic uncertainty stemming from the US Employment Situation Summary Report, which unexpectedly revealed stronger-than-anticipated job growth in May. This broader market volatility also impacted other cryptocurrencies. Ethereum (ETH) saw a 3.58% decline within 24 hours, while altcoins like Solana (SOL), Dogecoin (DOGE), and Pepe (PEPE) dropped by 5.61%, 8.70%, and 9.99% respectively, according to CoinMarketCap data.
The market downturn led to a combined $409.51 million liquidation of both short and long positions across various cryptocurrencies, as reported by CoinGlass. Of that amount, $56.71 million represented liquidated long positions in Bitcoin.
Bitcoin’s Recent Price Movement and Investor Sentiment
Prior to the price decline, Bitcoin had been hovering between $70,000 and $71,662 on June 5th and 6th. Many traders anticipated a potential rise closer to its all-time high of $73,679.
However, the recent price dip has caused some traders to adjust their strategies, potentially hedging their bets against a quick rebound. This shift in sentiment is reflected by the significant amount of short positions opened on Bitcoin futures contracts. If the price were to climb back to $71,000, it would trigger the liquidation of $1.38 billion in long positions. This indicates that futures traders are anticipating further price declines for Bitcoin.
Investor Confusion: ETF Inflows and Bitcoin Price
This trend towards shorting Bitcoin comes amidst investor questions regarding the lack of correlation between recent positive inflows into Bitcoin ETFs and the asset’s price. Notably, Bitcoin has not surpassed its March all-time high despite experiencing a 19-day streak of positive inflows into Bitcoin exchange-traded funds.
As reported by Cointelegraph on June 7th, analysts believe that numerous factors influence Bitcoin’s price, and the impact of ETFs may not be as significant as initially anticipated. Charles Edwards, founder of Capriole Investments, stated to Cointelegraph, “ETF flows are fantastic, but they are not strong enough to exceed the entire ecosystem selling (yet).”
Crypto trader Christopher Inks further emphasized the complexity of the market, highlighting that “the market is made up of spot, futures, ETFs, and options.” This underscores the need to consider a broader range of factors when analyzing Bitcoin’s price movements.
Source Link
Author: Sb
Read Also: Bitcoin Price Down After US Jobs Report Release
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.