On its third day of growth, the bitcoin price has been resisting the initial bearish momentum triggered by higher inflation rates in the United States. Currently, BTC is trying to break through the USD 21,000 resistance.
Against this backdrop, the CEO of analytics firm CryptoQuant, Ki Young Ju, warned in a tweet that traders’ short positions could be liquidated. In this way, he predicts a short squeeze or strangulation of such positions, like the one that occurred in December 2020, after which there was a significant price boost. This rally was very noticeable as, at that time, the all-time high of December 2017 was surpassed, and the USD 20,000 mark was crossed.
Although the occurrence of a short position liquidation usually happens in the middle of a bull run, the current bitcoin price progress is quite moderate compared to what happened at the end of 2020. That year, the bullish sentiment was driven by growing institutional support for bitcoin.
On the other hand, bitcoin’s rally in July this year is minuscule compared to the more than 70% drop that the first cryptocurrency has recorded since its all-time high in November 2021.
Still, Young Ju mentions the possibility of “parabolic growth” as growth greater than a linear price boom is called. “Expecting a big short squeeze. At the end of 2020, many people kept betting on short positions in $BTC and were liquidated in the USD 10,000-20,000 range before the parabolic bull run began,” the executive says in his tweet.
The executive is cautious, however, as to when the bullish breakout would occur. He says in a subsequent tweet that he has no elements to pinpoint a specific date.
Settlements on a downward trend
At the moment, the magnitude of liquidations is in a declining phase, both those of short positions and those betting on the upside of the price. This situation reflects the relative calm of the markets, where the technical parameters indicate a balance between buying and selling bids.
The chart shows that cryptocurrency settlements have been very close to their low in the last 90 days. Settlements during Thursday, July 14 totaled USD 20.4 million, of which USD 15.2 million were short positions.
The maximum liquidations occurred last June. On June 12 alone, positions totaling USD 562 million were liquidated, of which USD 218.3 million or 38.9% corresponded to short positions. Among those who bet on the price increase, USD 343.6 million were liquidated that day.
Among the reasons that could be driving the price of bitcoin are the acquisitions of BTC that different categories of holders have made in recent weeks.
So-called bitcoin sharks, those holders with between 10 BTC and 100 BTC, have acquired more than 50,000 BTC in the last 5 weeks. Also, bitcoin miners, who usually fall into the category of whales, or holders with more than 1,000 BTC, have started again to accumulate this cryptocurrency.