Why rising Bitcoin prices could not save long positions

  • Bitcoin’s recent price rise triggered a surge in long squeezes, signaling shifting market dynamics.
  • Put to call ratio for Bitcoin suggested a bearish sentiment amongst traders.

In the past few days, Bitcoin [BTC] price showed signs of bullish momentum, providing a glimmer of hope for its holders. However, despite the surge in price, long positions were getting liquidated.

Read Bitcoin’s Price Prediction 2023-2024

Long positions continue to suffer

According to CryptoQuant’s analyst SignalQuant, a ‘long squeeze’ transpired as the prices of Bitcoin rose. This event is characterized by investors holding long positions deciding to sell their holdings to minimize losses during a bearish market.

It’s essentially a defensive move taken by traders who bet on rising prices but are compelled to sell when the market goes south.

Notably, this past month witnessed a surge in long squeezes, contrasting with a scarcity of short squeezes. A ‘short squeeze’ is a situation where investors with short positions are forced to buy to minimize their losses during a bullish market.

The recent surge in long squeezes suggested that abrupt short squeezes may become more frequent in the still uncertain crypto market. This evolving landscape carries potential implications for Bitcoin’s future price movements.

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Source: Crypto Quant

Another critical aspect to consider is the Put to Call ratio. It’s a metric used to gauge market sentiment by comparing the number of put options (which allow selling) to call options (which allow buying). The rising Put to Call ratio could indicate a shift in market sentiment or a hedging strategy employed by traders.

Furthermore, Bitcoin’s open interest, a metric measuring the total value of outstanding futures contracts, was on the rise. This suggests growing interest in Bitcoin derivatives trading despite market fluctuations.

Additionally, implied volatility for Bitcoin also saw an uptick. Implied volatility represents the market’s expectations of future price fluctuations.

Its rise may signify increasing uncertainty among traders, potentially driven by various factors, including macroeconomic events or regulatory developments.

Screenshot 2023 09 21 at 3.41.48 PM

Source: coinglass

Whales shy away

Along with that whales also started to lose interest in BTC. Data from Glassnode indicated that the number of Bitcoin whales reached a one-month low of 1,585. This suggested that large holders may be either reducing their Bitcoin positions or diversifying their portfolios.

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As of the latest data, Bitcoin was trading at $26,985, with trading volume showing a decline.

Bitcoin BTC 15.43.10 21 Sep 2023

Source: Santiment

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