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Bitcoin: Caution warranted as BTC short squeeze risk rises

Press Releases Crypto News AMB-Crypto Bitcoin: Caution warranted as BTC short squeeze risk rises

Bitcoin shorts increase as the bearish conditions intensify.
Whales drive the current price action but a pivot may trigger shorts liquidations.

Bitcoin and the altcoin market are going through the most bearish week of 2023 so far. A situation that has resulted in the liquidation of long positions as prices crashed. Many derivatives traders have consequently shifted to short positions but there is an unforeseen risk.

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Bitcoin’s bearish performance so far this week has enticed many traders to execute short positions to take advantage of the falling prices.

But herein lies a potential risk of liquidations in case whales start buying up BTC, triggering a bullish pivot. Whales often take advantage of such situations because the liquidations extend the directional move, allowing them to benefit.

4/ Bearish:
– Jobs added >= 224k
– Unemployment rate <= 3.4%

Bullish:
– Jobs added < 224k
– Unemployment rate > 3.4%

Seems like the market is setup for a squeeze after yesterday’s action, traders are heavily short the crypto market. But, we’ll need a downside miss IMO! pic.twitter.com/qrxADT6IdG

— tedtalksmacro (@tedtalksmacro) March 10, 2023

Assessing the state of Bitcoin derivatives

A surge in Bitcoin Funding rates suggests that there is currently a strong increase in shorts. This means there is an increased risk of shorts liquidations if whales suddenly start buying.

Such a scenario is more likely to take place when there is a high level of leverage in the market. The level of leverage is still low so far, hence the risk of liquidation may not be as pronounced.

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Author: Michael Nderitu

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