No Comments
Over $5 billion worth of Bitcoin (BTC) shorts are at risk of liquidation if BTC price explodes above $75,000 to a new all-time high, and with all eyes this morning on the Fed FOMC Rates decision later today – could Bitcoin shorts be under threat?
In a post on X, citing heat maps showing the position of stacked limit orders, prominent analyst ‘BitcoinMunger’ alludes that prices might recover and bears should prepare for any eventuality, especially if a “short squeeze” happens.
Whenever a “short squeeze” forms, traders betting that prices will decrease and are forced to exit their position by buying, lifting prices even higher.
Over $5 billion in shorts waiting to get destroyed. The fuel just keeps growing.
When king daddy #bitcoin reverses, it is going to reverse really hard and fast. Tick tock! https://t.co/CBDfZqu37q pic.twitter.com/XNbGFbIqsx
— Bitcoin Munger (@bitcoinmunger) March 19, 2024
Bitcoin Under Pressure, Hundreds Of Millions Liquidated
Despite the potential for a refreshing bullish reversal, which seems likely when considering Bitcoin on-chain analysis.
Bitcoin has been under immense selling pressure in recent days – likely localized pressure by BTC miners selling into strength pre-halving.
According to CoinMarketCap data, the coin is down 13% in the past week of trading.
From the daily chart, BTC is also within a bear breakout formation, slipping below the 20-day moving average.
A brief dip below $61,500 on March 19 liquidated over $440 million in “long” positions – these “longs” are those betting that prices would go up, placed by traders on Binance and OKX.
Simply put, liquidation happens when a trader using borrowed funds, that is, using leverage, suffers losses.
To cover their bottom line, the exchange, in this case, Binance, OKX, or Bybit for instance, forcefully closes its position to prevent further losses.
As of March 20, CoinGlass data shows that over $161 million of leveraged BTC positions have been forcefully closed in the past 24 hours.
Over $90 million of longs were liquidated, and more than $70 million of shorts were closed.
The dump has been fueled by news that Grayscale, a digital asset management firm that previously managed one of the most popular Bitcoin products, the Grayscale Bitcoin Investment Trust (GBTC), has been selling more coins than expected. On March 18, GBTC posted an outflow of $640 million, forcing prices lower.
Market anxiety worsened with news that Microstrategy Chairman Michael Saylor has also been selling MSTR stock.
Will BTC Rally After Fed FOMC Rate Decision?
Traders are closely monitoring how prices evolve ahead of the highly anticipated Federal Open Market Committee (FOMC) meeting later today.
While most expect the Fed to keep interest rates static at 5.25-5.5%, past pronouncements have triggered volatility – with any sign or tone of divergence from the Fed’s commitment to 2% inflation likely to trigger panic.
The Federal Reserve, through the FOMC, will lay out its medium-term monetary policy plan. This might significantly impact Bitcoin and crypto prices.
However, whether Bitcoin will recover or not remains to be seen – yet, with solid exchange data showing that a spike above $73,800 might see short positions unwound in their billions – this paints an alluring target for market makers.
Explore: SOL Breaks $200: Why Solana is Exploding Now Compared to Rest of the Crypto Market
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
