Bitcoin, reached an all-time high of $69,300 nearly two and a half years after the last bull market’s peak. It has been a long journey since November 2021, when Bitcoin lost momentum and transitioned from a full bull market to a prolonged crypto winter. Crypto investors had to wait until the beginning of 2023 for signs of hope. Since then, Bitcoin’s price has been climbing steadily, entering a new phase of price discovery.
What’s Happening on the Bitcoin Front?
Investors tend to check past data of any asset to guide them in a trade transaction. When an asset sets a new ATH record, it enters a phase where no one knows what will happen next. There are no resistance or support levels to guide an investor. Analyst Chris Dunn expects a domino effect that will push Bitcoin’s price to even higher levels in the short term:
“As people buy at the breakout points, short positions get liquidated, and potential sellers withdraw their orders from the books, I expect the trend to accelerate towards the all-time high.”
Bitcoin has been rising steadily over the past year. However, since February 16th, Bitcoin’s price transformed into mega green candles, increasing Bitcoin’s price by 25%. Many investors were expecting a pullback during this period, but on February 27th, Bitcoin surprised the market with another giant green candle, raising the Bitcoin price by another 25% and surpassing the $60,000 level. These green candles caught many short position holders off guard.
The Futures Market and Bitcoin
According to data from the crypto data platform CoinGlass, $161 million worth of Bitcoin short positions were liquidated in just 24 hours on February 27th. When Bitcoin briefly reached $57,000, short positions were liquidated, resulting in a total loss of $268 million. Since then, Bitcoin’s price has not fallen and has finally risen above the $69,000 level.
When short positions are liquidated, investors who bet on Bitcoin’s price drop usually have to buy back the Bitcoin they sold at a higher price to close their positions. This sudden increase in buying pressure can lead to a rapid rise in Bitcoin’s price.
Short sales can trigger a gradual effect known as a short squeeze, where those who shorted rush to buy back Bitcoin to close their positions, further driving up Bitcoin’s price. This phenomenon can intensify price movements and lead to significant volatility in the Bitcoin market.
