As Bitcoin (BTC) hovers around the $70,000 mark, there is speculation that short-sellers are feeling the heat as downtrends diminish and uptrends pick up speed. This could potentially drive Bitcoin’s price to $80,000, according to an analyst.
In a post on March 26, trading resource The Kobeissi Letter stated, “This is a clear indication that shorts are being squeezed as we hit new all-time highs.” The main factor behind the BTC short squeeze, according to The Kobeissi Letter, is the record-high margin between institutional long positions and hedge fund short positions.
“While hedge funds hold nearly 15,000 net short contracts, institutions hold nearly 20,000 net longs,” the post added. Additionally, Bitcoin’s price dips have been getting shorter and shorter.
Over the past seven days, Bitcoin reached its lowest point at $61,224 on March 20 and its peak at $71,511 on March 26, representing a gap of just 8.7%, according to CoinMarketCap data. The current price of Bitcoin is $70,480. If it reaches $71,000, $156.18 million in short positions will be liquidated, while a climb to $75,000 will liquidate $3.85 billion in short positions, according to CoinGlass data.
Lead analyst Pav Hundal from crypto exchange Swyftx told Cointelegraph that at this point, Bitcoin could reach unprecedented all-time highs. Hundal said, “The potential for a violent price action is off the charts right now. If we see a short squeeze, Bitcoin could go vertical to $80,000, and from there, you really have to seriously consider the $100,000 mark at some point this year.”
Swan Bitcoin CEO Cory Klippsten also commented on the ongoing battle between long and short positions, stating that eventually, one side will crack. He said, “Somebody has to break at some point. They are accumulating more and more capital to defend their views. It’s fascinating. We advise all our clients not to think about the next 5-10 years. However, I am a willing and enthusiastic speculator.”
Hundal suggested that asset managers may be hedging their bets by taking both long and short positions. He explained, “This is not a typical bulls versus bears battle. Asset managers have significant long exposure to Bitcoin.” According to Hundal, these investors are likely covering their bets by taking out shorts to mitigate their downside exposure.
Klippsten suggested that the increased trading activity in Bitcoin could be in anticipation of the upcoming Bitcoin halving, which is scheduled for April 21. He explained that the halving event is historically marked by speculative trading, where traders buy the rumor and sell the news. This could potentially lead to a short-term downturn in Bitcoin’s price.
In conclusion, the pressure on short-sellers in the Bitcoin market, coupled with diminishing downtrends and faster uptrends, could drive Bitcoin’s price to $80,000. Asset managers with long exposure to Bitcoin are taking both long and short positions to mitigate risk. The upcoming Bitcoin halving event could also contribute to increased trading activity and potential price fluctuations.