The number of Bitcoin short positions on cryptocurrency exchange Bitfinex dropped by around 67% in an instant. Their current amount is the lowest it has been since January 2018. With the number of long positions being almost twice as much, it’s interesting to see if the price is set up for a long squeeze.
Bitcoin Shorts on Bitfinex Tumble 64%
The number of short positions on Bitfinex plunged 64 percent on July 29th, just a few hours before Bitcoin’s price dropped from about $12,500 to $10,900 where it’s currently trading at. This represents a decrease of about 12.8%.
As it can be seen from the chart, the drop was instantaneous, which could signal that it was carried out by a single entity. In any case, the number of shorts on Bitfinex at the time of this writing stands at around 10,687. It’s the lowest it has been since January 15th back in 2018.
On the other hand, we can also see that the number of long positions has also decreased by about 42 percent to about 19,350.
Their amount, however, is almost two times greater compared to the opened short positions following the massive drop.
We’ve seen this happen before. As Cryptopotato reported back in May, the number of Bitfinex shorts dropped by about 40%, while long positions back then marked a slight increase. Following the event, Bitcoin’s price dropped about 10% in the next day.
This time, we’ve also seen a drop in Bitcoin’s price but it happened immediately after the short positions were closed. Yesterday, BTC lost around $700 or around 6% of its value, begging the question if it was related to the sudden drop in the number of short positions.
Long Squeeze in The Making?
When the number of opened short positions is substantially lower than the number of opened long positions, the price is usually primed for the so-called long squeeze. It’s a situation where the price goes down, inciting further selling.
However, it’s also worth noting that the move could have been someone’s mistake, or it could have been liquidation. It’s also possible that it was a mining organization which used short positions as a hedge against low BTC prices. We have yet to see how will this affect the market in the days to come.
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