Bitcoin (BTC) Faces $259M Short Squeeze: Future Projections as Prices Dip Below $70K

• Bitcoin (BTC) recently experienced the largest volume of short liquidation in almost two years.
• The price of BTC has slipped below the $70,000 price zone, raising questions about its future trajectory.
• According to CryptoQuant, over $259 million in short positions were liquidated, marking a significant event in the crypto market.

Discover the latest developments in Bitcoin’s volatile market, including a massive $259 million short squeeze and its implications for future price movements.

Bitcoin’s Massive Short Liquidation

Bitcoin (BTC) is poised for a pivotal year in 2024, potentially making history or repeating past trends. Recently, its price surge triggered the largest short squeeze since 2022, leading to a significant rise in Open Interest volume. Although the price has since declined, this could be a sign of another major move ahead.

Bitcoin Knocks Out Short Traders

Like a boxing match, Bitcoin and the market have been going head-to-head in the ring. Many spectators bet against Bitcoin emerging victorious, but the reverse saw them counting their losses. This scenario played out recently when a rise in BTC’s price led to a massive liquidation of short positions. According to CryptoQuant, by the end of trading on 20th May, over $259 million in short positions were wiped out. This event, known as a short squeeze, occurs when the price of an asset rises sharply, forcing traders who had bet on a price drop to close their positions. According to data, this was the largest short contract liquidation since 2022.

Bitcoin Open Interest Climbs

An analysis of Bitcoin Open Interest on Coinglass indicated a substantial recent cash inflow. One effect of short liquidations is that closing positions prompts more buyers to create new positions, causing additional cash to flow into the asset, in this case, Bitcoin, and increasing the Open Interest. As of now, BTC’s Open Interest was $35 billion. Despite the price of BTC falling below the $70,000 range in the last 24 hours, Open Interest has continued to rise. This suggests that more traders are still betting on another price increase in addition to short positions being settled.

How BTC Has Trended

According to AMBcrypto’s analysis of Bitcoin on a daily time frame, BTC fell from the $71,000 range by the end of trading on 21st May. The chart indicated a decline of approximately 1.8%, bringing the price to around $70,142. As of this writing, BTC was trading at about $69,830, reflecting a decline of less than 1%. Short sellers might see this as an opportunity to bet against Bitcoin, but many will still be observing the trend. BTC has managed to rise above its short Moving Average (yellow line) and turned it into support around $66,000. If this support holds, BTC might soon test the $75,000 price zone.

Conclusion

In conclusion, Bitcoin’s recent price movements and the massive short liquidation event have created a dynamic and uncertain market environment. While the price has dipped below $70,000, the rising Open Interest suggests that traders are still optimistic about a potential price increase. As we move forward, it will be crucial to monitor these trends and market reactions to gauge Bitcoin’s future trajectory.