Bitcoin’s recent drop to 53-day lows may be due to a “cascading long squeeze” as miners continue to sell, according to a Bitcoin analyst. In a post on June 24, Willy Woo, a pseudonymous Bitcoin analyst, stated that speculators were adding to new long positions, providing more fuel for liquidations in a cascading long squeeze.
Woo explained that a long squeeze occurs when a large number of long-position investors start selling their holdings as the price falls, causing the price to drop even further. This has a cascading effect on other long-position holders. On the other hand, a short squeeze occurs when retail traders pump up the price of a stock, forcing large short investors to buy back the stock at a higher price, pushing the stock price up.
According to CoinGlass data, when Bitcoin fell below $59,000 on June 24, it wiped $1.16 billion in long positions. On the other hand, a similar 3.73% upward swing would erase $2.18 billion in short positions, indicating that traders currently have more confidence in the price going downward.
Woo also mentioned the ongoing “post-halving miners capitulation” event, which is a theory that miners will turn off their hardware and sell their coins if Bitcoin falls below a certain price and mining becomes unprofitable.
Bitcoin’s price is currently trading slightly above the crucial $60,000 level, at $61,320 at the time of publication, according to CoinMarketCap data. On June 24, Bitcoin saw its biggest daily decline in over three months, dropping 6.26% to $58,890. JAN3 CEO Samson Mow believes that the “Bitcoin dip is purely sentiment and fear driven, not from selling off large holdings.” It’s important to note that this article does not contain investment advice or recommendations, and readers should conduct their own research before making any investment or trading decisions.