Bitcoin triggers retracement in the cryptocurrency market
The cryptocurrency market is experiencing a retracement on December 26, primarily driven by Bitcoin (BTC). This correction coincides with rumors of Mt. Gox finally compensating its creditors after the exchange collapse in 2014. As the bearish sentiment intensifies, short-sellers of Bitcoin are profiting significantly. Consequently, other speculators are increasing their short positions, which could potentially lead to short-squeeze liquidations.
Spotting short-squeeze opportunities for Bitcoin in January 2024
Finbold has analyzed derivatives data from CoinGlass to identify potential short-squeeze opportunities for Bitcoin in January 2024. A short squeeze occurs when short-sellers are forced out of their positions due to a surge in price, resulting in liquidations and further driving up the price.
Bitcoin’s liquidations and short positions
In the weekly timeframe, Bitcoin has a significant number of liquidations at the $44,640 price level. Market makers may target this level as it represents $894.76 million worth of liquidations. Additionally, there are over $8 billion worth of liquidations between $44,000 and $45,000, which could trigger a series of short squeezes for Bitcoin in January 2024. Within the last 24 hours alone, $17.93 billion of short positions have been opened, while Bitcoin is currently trading at $42,365.
Ethereum’s potential for a short squeeze
Ethereum (ETH), the second-largest cryptocurrency, also faces the possibility of a short squeeze if bearish traders continue to invest capital. In the past 24 hours, Ethereum has seen $9.17 billion of short positions being opened, accounting for 52.31% of the daily open interest. However, the weekly liquidations heatmap for Ethereum appears more balanced compared to Bitcoin’s. Notably, there are $26.76 million worth of liquidations at the $2,310 price level, with relevance extending up to $2,400.
No guarantees for short squeezes
It is important to note that there are no guarantees that short squeezes will occur with these cryptocurrencies. Crypto investors should conduct their own research and consider additional data before making financial decisions. A short squeeze depends on a shift in market sentiment from bearish to bullish while there are still open positions in the previous direction.
Hot Take: Potential Short Squeezes in Bitcoin and Ethereum
The cryptocurrency market is witnessing a retracement triggered by Bitcoin, leading to increased speculation about potential short squeezes. As Bitcoin and Ethereum face significant liquidations and the opening of short positions, traders must remain vigilant. The possibility of short squeezes arises if market sentiment shifts from bearish to bullish while existing open positions remain. However, it is crucial for investors to conduct thorough research and consider various factors before making any financial decisions. While short squeezes can generate substantial profits for some, they are not guaranteed outcomes in the volatile world of cryptocurrencies.
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