According to Bitcoin analyst Willy Woo, “Massive long squeeze” may be the reason why Bitcoin price dropped to a recent 53-day low as miners continued to sell.
“Speculators continue to add to new Long positions only to fuel more liquidations as Long squeezes en masse.”
…speculators kept adding to new long positions, just adding more fuel for more liquidations in a cascading long squeeze.
Bridging us down to the 58k cluster, which just got taken out. pic.twitter.com/8Pvzccm8vF
— Willy Woo (@woonomic) June 24, 2024
A long squeeze occurs when large numbers of Long traders (bullish Bitcoin bets) begin selling their holdings when the price falls to cut losses. This causes the price to drop even more, leading to a ripple effect on other Long traders.
The opposite is called a Short squeeze – a term that became famous when retail traders pumped up the price of GameStop shares in January 2021, forcing large Short investors to buy back shares at a higher price to limit prevent losses and thereby push stock prices to huge levels.
According to CoinGlass data, a drop below $60,000, similar to June 24 when Bitcoin fell below $59,000, would wipe out $1.16 billion in long positions. However, a similar 3.73% increase would wipe out $2.18 billion in short positions, suggesting that traders are now more confident in a price drop.
“It is worth analyzing what is happening due to fear in the market,” Woo added.
This sentiment comes as the Crypto Fear and Greed Index – which measures market sentiment towards Bitcoin and the cryptocurrency market in general – dropped to 30 (“Fear”) – its lowest score in 18 month.
Source: alternative.me
Weak market sentiment comes amid concerns about the risk of Mt. Gox dump worth $8.5 billion to the market and recent mass outflows from US Bitcoin spot ETFs.
Miners continue to capitulate after halving
Woo also pointed out the ongoing “miners surrendering after halving” event. The theory is that miners will shut down equipment and sell coins if BTC drops below a certain price level that makes mining unprofitable.
“Add to this a liquidation squeeze, forcing miners to capitulate after the halving,” he said, explaining that miners selling Bitcoin are able to get needed upgrades while the weakest miners are shutting down and being eliminated. out of the game”.
According to CoinMarketCap data, Bitcoin price is trading slightly above the key $60,000 level, at $60,735 at the time of writing.
Bitcoin 4-hour price chart | Source: TradingView
On June 24, Bitcoin recorded its biggest daily drop in more than three months, falling 6.26% to $58,890, according to commentator Bitcoin Archive.
Surname write on June 24:
“Biggest daily price drop in 97 days.”
Jan3 CEO, Samson Mow, believes:
“Bitcoin’s decline is purely driven by psychology and fear, not by a massive sell-off of holdings.”
You can see Bitcoin prices here.
Minh Anh
According to Bitcoin Magazine
