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Bitcoin Rise Accelerates Short Liquidations, Return Of Bulls Still Doubtful

Bitcoin Cryptocurrency News Price Analysis

Rise of Lead Crypto Coins

It is great to see lead crypto coins gaining value increases, particularly since the past week. The performance of the entire cryptocurrency industry has been quite remarkable in the past week.

It is quite comforting to see that after such a long time, the cryptocurrency industry has started to experience a major surge.

The industry had to wait for an entire year to experience a long-running rally. It seems that the curse that was bestowed upon the entire crypto industry in 2022 has finally started to lift.

Since last week, Bitcoin saw its value surging by at least 22.6% while Ethereum’s value swell by almost 18.6%. However, this impressive rise has also accelerated short liquidations of the two lead coins since 14th January 2023.

Concepts of “Short Liquidations” and “Short Positions” Explained

In the hope of anticipating near future value declines in Bitcoin and Ethereum, traders open positions widely known as ‘short positions’.

However, if the value climbs instead of dropping, then these short position holders are forced to buy back the asset at an increased value.

In such a situation, there is no turning back for short traders whose positions are automatically liquidated after the value increase.

This action of ‘short liquidations’ is primarily initiated by crypto trading platforms from where the traders had originally opened short positions.

Analysis of Bitfinex

The rise of lead coins and the subsequent kick-starting of short liquidations in Bitcoin and Ethereum were duly analyzed by Bitfinex.

Bitfinex has compiled the latest report titled as ‘Alpha Report No.37”. This very report discusses short liquidations in detail and focuses on the ones that recently occurred in Bitcoin and Ethereum.

The analysis report notes that the shortest liquidations in Bitcoin and Ethereum took place on 14th January 2023.

Short Liquidations Vs. Long Liquidations

Bitfinex explains that it was because of the short liquidations that lead to exceptional value surges for Bitcoin and Ethereum.

According to Bitfinex’s report, over $450 Million worth of short liquidations were recorded on 14th Jan 2023.

The report thereafter compares short liquidations with long liquidations. It then arrives at a conclusion that the present short liquidation amount of $450 Million is as high as that of July 2021.

This means that in a span of one and a half years, such a high scale short liquidations never took place either for Bitcoin or Ethereum.

The report further notes that the ratio of short liquidations was even far worse in the altcoins.

Bitfinex’s Bitcoin Theory

With regard to Bitcoin, Bitfinex has its own theory in which Bitcoin’s future price projection in upward is still shaky.

Bitfinex’s argument is that a total wipeout of short positions is a usual indication of bulls yet it cannot guarantee a 100% return of bulls.

Bitfinex impliedly refused to happen to Bitcoin bulls based on the fact that the value surge was boosted by the disposal of short positions. It then suggested that a ‘pullback can hence not be ignored in Bitcoin for sure’.

Bears Indication Questionable

Based on its analysis, Bitfinex is hence doubting the indication of bulls. It noted that the value surge may or may not be organic, yet it seems more like an ‘engineered’ event by the traders.

According to Bitfinex, nothing really has changed particularly with regard to market orders which are the same as they were in the past week. Hence, the indication of returning of bulls is questionable.

Sentiment for Bitcoin and Ether in the Market

The latest push has however removed negativity and brought back positive sentiment amongst Bitcoin and Ethereum investors. Yet there are some analysts who are terming the event as “doubtful”.

For instance, the renowned analyst of Bitcoin namely Willy Woo suspected the return of bulls by terming the event ‘suspicious’.

However, the majority of Bitcoin and Ethereum communities are not agreeing with what has been suggested by Woo, Bitfinex, and others.

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