As the price of Bitcoin (BTC) hovers around the $70,000 mark, there are speculations that short-sellers are feeling the heat due to decreasing downtrends and faster uptrends, potentially pushing Bitcoin’s price to $80,000, according to an analyst.
In a post on March 26, trading resource The Kobeissi Letter stated, “This is a clear indication that shorts are being squeezed as we reach fresh all-time high territory.” The main reason for the BTC short squeeze, as explained by The Kobeissi Letter, is that the margin between institutional long positions and hedge fund short positions is currently at a record high.
“While hedge funds hold nearly 15,000 net short contracts, institutions hold nearly 20,000 net longs,” the post added.
At the same time, it noted that Bitcoin’s price dips are getting shorter and shorter. Over the past seven days, Bitcoin reached its lowest point at $61,224 on March 20 and its peak at $71,511 on March 26, representing a gap of just 8.7%, according to CoinMarketCap data.
Bitcoin’s current price is $70,480. If it reaches $71,000, $156.18 million worth of short positions will be liquidated, according to CoinGlass data. A climb to $75,000 will liquidate $3.85 billion worth of short positions.
Pav Hundal, the lead analyst at crypto exchange Swyftx, told Cointelegraph that at this point, it could propel Bitcoin to unprecedented all-time highs. Currently, Bitcoin’s all-time high is $73,737.
“The potential for a significant price action is extremely high right now. If we see a short squeeze, Bitcoin could skyrocket to $80,000, and from there, we can seriously start considering the $100,000 mark at some point this year,” Hundal said.
Cory Klippsten, the CEO of Swan Bitcoin, mentioned that while he enjoys watching the ongoing battle between long and short positions, eventually, one side will give in.
“At some point, somebody has to break. They are accumulating more and more capital to defend their views. It’s fascinating. We advise all our clients not to think about the next 5-10 years. However, I am an eager and willing speculator,” Klippsten said.
Hundal suggested that asset managers may be hedging their bets by taking both long and short positions.
“This is not a typical bulls versus bears battle. Asset managers are holding record amounts of long exposure to Bitcoin,” he explained. Hundal suggested that asset managers are taking both positions to mitigate their downside risks.
“It’s likely that the same investors are hedging their bets by taking out short positions. It’s a risk game. Institutional investors are willing to pay a premium to protect themselves from downside risks,” Hundal stated.
Klippsten suggested that the increased trading activity in Bitcoin could be in anticipation of the upcoming Bitcoin halving, scheduled for April 21.
“Bitcoin’s halving event is historically marked by speculative trading, where traders buy the rumor and sell the news,” Klippsten explained, adding that this could lead to a short-term downturn in Bitcoin’s price.