Are we about to see a massive Bitcoin short squeeze?

in bitcoin •  last month

The ratio of BTCUSD longs vs shorts on Bitfinex has never been this high this year. It has just hit a record high of 1.4 as you can see in the second chart below. The previous record was 1.2 which was set on April 12th. Look for yourself what happened on April 12th with Bitcoin. We saw a massive short squeeze on that day! Bitcoin surged by $1,000 within one hour. Will the same happen again this week?

Bitcoin price + BTC short positions

BTCUSD longs vs shorts ratio

What does this ratio mean?

A record high longs vs shorts ratio means everyone is betting on a lower Bitcoin price. Many people are lending huge amounts of Bitcoin on Bitfinex to sell them on the market to buy them back at a lower price. At least, if the price goes lower. It also means hardly anyone expects a higher Bitcoin price. Everyone goes short, nobody goes long. But as everyone has sold their Bitcoins there are no sellers left to press the price lower. The number of sellers is drying up. And then the opposite happens. Bitcoin is slowly going higher and everyone who bet on the short side is getting nervous. They did not only sold their own Bitcoins, but also borrowed Bitcoin to buy back later. They have to buy those coins back once to pay back their loans. As the price of Bitcoin goes higher and higher more people have to close their short positions which means they have to buy Bitcoin on the market. This is pushing up the price even further. This is called a "short squeeze"

A short squeeze is a situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure on the stock. It implies that short sellers are being squeezed out of their short positions, usually at a loss. investopedia.com

What could trigger a short squeeze?

Bitcoin has its first resistance at $6540 and the next at $6628. I expect most people have their stop loss orders closely above these levels. Once we break these price levels I think we can expect to see a short squeeze which could push Bitcoin back to $7500 in a very short time.

Lending on Bitfinex

Borrowing Bitcoin on Bitfinex has become quite expensive since a couple of days. Bitcoin shorters are currently paying a 15% APR (Annual percentage rate) while 3-4% is normal. This also means the demand to short Bitcoin is extremely high.
When these shorts get liquidated.... Moon!

Disclaimer: This is no trading advice.


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Okay, IF bitcoin surge to 7000-8000, what happent to STEEM?
It might stay the same 0.8 or even fall at least short-time.

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I think Steem is one of the most bullish coins rn. Most usage out of all cryptos.

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Keep an eye on $bnb as well

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If Bitcoin surges by 10% we can expect a higher STEEM price as well.

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Back to 6? :p

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If it surges 10%, it'll come back down again. There's not enough juice in the space right now to sustain the increase. Hopefully a beneficial swan will swoop in and change that.

I think Btc will come back from 7000. It is so bad for altcoins.

@penguinpablo April was due to 250M Tether printings? If so, with only 50M the last days it should not be that hard.

BTC, you can do it, give us the M.O.A.S.S.!!!

Great info, I hope it happens!

What does this mean for the price of SBD, STEEM? @penguinpablo

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If Bitcoin surges by 10% we can expect all altcoins will rise as well. At least, in dollar terms.

We definitely need a short squeeze. I wonder why ppl are shorting a huge support (6k)

I sure hope not, I am hoping the price goes down more so I can load up

Hmmm, thanks for the info!

Very interesting, I hope it's going to be the same as in April. How can I have this ratio if I don't use Bitfinex? (I have kraken and Binance)

The shorters are likely to lose their bet as market conditions are favoring increase in BTC price.

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Well I sure hope this will be the case because I can't take this much longer :S

Interesting to see if we are going to see that materialize. ;)

I love the smell of shorts burning in the morning.

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Haha, nice!

Once we shorted the whole day.

Compelling chart!! thank you!

throughout a post you repeat "longs vs shorts ratio" but you mean opposite, which is misleading ;) because you mean shorts/longs, what can even be seen on the chart

overall I Iike your stats very much

Really interesting information. I was not aware of this!
Thanks for sharing the details. Time will tell where we go but I think that the markets have to turn out at some point soon.

he best news I heard for the day. Thanks a great deal for the charts.

To the question in your title, my Magic 8-Ball says:

Signs point to yes

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