Cascading Long Squeeze" and Market Fear Drives Bitcoin to 53-Day Lows, Analysts Say
Summary:
Bitcoin's recent drop to 53-day lows is possibly due to a "cascading long squeeze" where investors expecting a price increase begin offloading as prices fall, accelerating the decline, suggests cryptocurrency analyst Willy Woo. Market fear is at a high, with a "post-halving miners capitulation" occurrence continuing, where if Bitcoin price falls too low, miners sell and cease operations. As of June 25, Bitcoin's slight recovery places it just over the vital $60,000 mark.
The sudden decline of Bitcoin (BTC) to its 53-day low value could be due to what's known as a "cascading long squeeze", says cryptocurrency analyst Willy Woo. This occurs when investors anticipating a price increase of Bitcoin begin offloading their holdings to minimize damages as the prices begin to plummet. The resultant effect is an additional decrease in value, further impacting investors in a similar position. This is strategically opposite to a short squeeze, a technique popularly utilized in January 2021 when GameStop shares were inflated by retail traders, manipulating large short investors into repurchasing stocks at inflated prices thereby leading to a rapid increase in stock value. Data from CoinGlass indicates that a Bitcoin dip below $60,000, like what transpired on June 24, would eradicate $1.16 billion of long positions. However, an upward swing of a similar 3.73% would wipe out $2.18 billion of short positions, thereby indicating investor confidence in a continual downtrend. Woo offers a breakdown of this occurrence due to prevalent market fear, highlighted by the recent fall of the Crypt Fear and Greed Index for Bitcoin and other cryptocurrencies to its lowest in a year and half. Woo also mentions the continuation of "post-halving miners capitulation" phenomenon, where miners choose to sell their Bitcoins and switch off their hardware if the Bitcoin price falls too low, leading to unprofitability of mining. As of June 25, Bitcoin is trading marginally above the important $60,000 mark at a price of $61,320, with a 2.06% drop in the last 24 hours, reports CoinMarketCap. Just a day before on June 24, Bitcoin experienced its most drastic daily fall in more than three months, with a 6.26% drop to $58,890. Samson Mow, CEO of JAN3, suggests that the current Bitcoin dip is chiefly due to market sentiment and fear amplification rather than actual large-scale selling off of holdings. Please note this article does not constitute financial advice, all trading and investments carry risks, and informed research is advised before making any decisions.
Published At
6/25/2024 8:51:46 AM
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