Bitcoin is now trading close to $66,200 at which $10 billion worth of shorts could be closed out.
Another set of liquidation levels are at $70,300 and $72,578 at which various forms of liquidation start to cause further rise in price levels.
A short squeeze could produce fast price gains that could push the Bitcoin price to new high levels perhaps crossing $70,000.
The cryptocurrency market itself could be in the early stages of a significant short-squeeze as wobbly Bitcoin renews itself at $66,200. Market observers are interested in carrying liquidation rates, claiming that more than $10 billion of short positions could be forced out with price increases beyond this level. This development could set off a chain reaction which could force prices to increase in what appears to be a near vertical line.
At $66,200, Liquidation Could Trigger a Chain Reaction
Liquidation levels are a key metric in understanding market pressure. When a short position is liquidated, the trader is forced to buy the asset at the current price, which can lead to a sharp price increase if there is a large concentration of liquidations at a specific level.More so, a spot buy will be evident when Bitcoin hits $66,200, marking the elimination of about $ 10bn worth of short contracts.
https://twitter.com/martypartymusic/status/1843122930974126324 Larger Liquidations Await at Higher Levels with a Short Squeeze
If this first round of liquidations is to occur then it could trigger a domino effect. Besides the $66,200, there are other two liquidation targets, which include $70,300 per short position of $16 billion and $72,578 for a short position of $18 billion.
These liquidations could potentially send the price of Bitcoin even higher if market conditions allow it as the chart below shows.Short squeeze is a situation characterized by a tightly short sold security experiencing an upward price shift that causes short-sellers to cover, thus increasing the price even further.
Current short positions have their worth pegged at billions; market prices may shoot through the roof should these situations take root. The pressure may lead to a sharp upward momentum, likely driving Bitcoin past $70000 and above.
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