Bitcoin’s Dive to $60K Attributed to Intense Long Squeeze

Recent trends in Bitcoin’s market dynamics have been partially attributed to a “cascading long squeeze,” which has pushed the cryptocurrency to its lowest point in nearly two months as miners ramp up their sell-off, a Bitcoin expert suggests.

The expert, using the pseudonym Willy Woo, highlighted in a recent X post from June 24 that speculators are continuing to pile into long positions, inadvertently exacerbating the cycle of liquidations that contributes to further price drops.

A long squeeze occurs when investors who have bet on the price increasing start to offload their Bitcoin in response to falling prices, hoping to minimize their losses. This, in turn, drives the price down further, creating a domino effect among other investors with similar long positions.

Conversely, a short squeeze—which gained mainstream attention during the GameStop price surge in January 2021—occurs when the price of an asset increases significantly, compelling those who bet against it to purchase it at higher prices to mitigate their losses, which further drives the price upward.

Data from CoinGlass indicates that if Bitcoin’s price were to fall below $60,000, similar to its dip to $59,000 on June 24, about $1.16 billion worth of long positions would be liquidated. Conversely, a 3.73% increase in price could eliminate around $2.18 billion in short positions, suggesting a bearish sentiment among traders.

Woo believes that analyzing these trends is crucial given the prevailing market anxiety.

Post-halving miners capitulation continues

In the context of these market fluctuations, Woo also discussed the “post-halving miners capitulation,” a phenomenon where miners may shut down their operations and sell off their Bitcoin holdings if mining becomes too costly relative to the price of Bitcoin.

“This compounded by the liquidation events we are seeing adds to the pressures faced by miners, forcing the less economically resilient ones to exit the market,” Woo explained.

As of June 25, Bitcoin is trading just above the key $60,000 mark, with a value of $61,320, as reported by CoinMarketCap.

On June 24, the cryptocurrency experienced its largest daily decrease in more than three months, plunging by 6.26% to $58,890, as noted by Bitcoin Archive, a crypto analysis account.

“This marks the most significant daily price reduction in 97 days,” the commentator posted on June 24.

Samson Mow, CEO of Jan3, commented on the recent dip, stating that it is driven by market sentiment and fear, rather than substantial sell-offs by large stakeholders.

For more news, find me on Twitter Giannis Andreou and subscribe to my YouTube channel.

What is your opinion on this issue? Leave me your comment below! I’m always interested in your opinion

Leave a Reply

Your email address will not be published. Required fields are marked *

Recommended for you