Short squeeze for cryptocurrencies
When traders bet on a cryptocurrency falling and the price starts to rise, those with short positions need to buy quickly to cover their losses. This movement creates a bullish spiral, which can push the price of Bitcoin to unexpected levels. In situations like this, liquidity in the market becomes crucial, and the volume of short positions makes BTC easy prey for bulls.
The cryptocurrency market is about to face a movement that could surprise many traders. Experts, such as analyst Ali Martinez, highlight the possibility of a short squeeze in Bitcoin (BTC) soon.
This phenomenon occurs when short positions are liquidated en masse. This forces the purchase of assets, resulting in a sudden increase in price.
The recent dominance of short positions in the derivatives market points to this possibility. According to data from Binance, 57.77% of open positions are betting against BTC on September 27, 2024.
Bitcoin remains in a downward trend that has lasted for more than six months. However, the cryptocurrency is exhibiting a short-term sideways movement, signaling a consolidation phase.
This scenario has created a fierce dispute between the bulls (buyers) and the bears (sellers), as analysts disagree on the future direction of the main cryptocurrency.
However, the sharp increase in short positions suggests that sellers may be underestimating the potential for a sudden rally, which could trigger the much-feared short squeeze.
