Bitcoin bears face short squeeze risk as price rises above $44,000, analyst says

Markets • December 5, 2023, 12:31PM EST
Published 1 minute earlier on
UPDATED: December 5, 2023, 2:20PM EST
The Block

Quick Take

  • Bitcoin short leveraged positions are at risk as the digital asset breaks through the $44,000 mark.
Bitcoin short leveraged positions have been left vulnerable as the digital asset surpassed the $44,000 mark, with a number of positions liquidated amid the recent surge.
 
Following BTC +3.42% 's breakthrough beyond the $42,000 mark on Monday, the world's largest digital asset by market capitalization cruised past $44,000 for the first time in more than a year on Tuesday. A significant number of leveraged positions have been liquidated as a result. 
 
BTCM Chief Economist Youwei Yang identified $45,000 as the next crucial resistance level for the digital asset, suggesting an elevated likelihood of a short squeeze above this threshold. "The bears may be facing a short squeeze risk of bitcoin topping the next key resistance level of $45,000," Yang told The Block.
 
He added that there is currently a high level of leveraged positions that could be wiped out if the market becomes increasingly volatile. "There is now a likelihood of higher market volatility of both short squeeze and long liquidation within a short period of time simultaneously," Yang continued.
 
Coinglass data shows a high level of liquidated leveraged positions in the cryptocurrency market over the past 24 hours.

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Bitcoin's 'bullish catapult'

Analysts from Bitfinex pointed to two BTC price levels that have seen a significant amount of liquidations given the recent market volatility. "Currently we can see large short liquidations at $41,950, and then at $42,200," Bitfinex analysts told The Block.

Above these levels Bitfinex, the analysts said that the bitcoin price could experience "a bullish catapult" due to forced liquidations when shorts are forced to buy in order to close their trades.

Bitcoin was up as much as 5.3% on Tuesday, trading for $44,090 at 1:45 p.m. ET.

(Updates headline and story to show that bitcoin surpassed $44,000 on Tuesday.)


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About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].

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