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Recently, the price of Bitcoin has skyrocketed.
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rapid rise
Bitcoin
Traders who had been betting on cryptocurrency prices have licked their wounds, but there are still quite a few bearish traders left.
Bitcoin’s price rose by about 20% in just a few days and surged from $17,500 to $21,000 in less than a week. The largest cryptocurrency, which was around $20,800 on Monday, surged to its highest level since the collapse of crypto exchange FTX in November, hitting the market hard and pushing Bitcoin to a two-year low. , down to his $15,500.
“Rising risk appetite has caused bitcoin to surge, hovering between $16,000 and $17,000 in the last few weeks of last year. said Craig Earlam, an analyst at broker Oanda.
“It is not clear if this is a sign that we have bottomed out and are experiencing a recovery, or if it indicates a temporary recovery, but it is clear that there are still some very bullish traders out there. It will be an interesting few weeks. must.”
The sharp rise has brought pain to traders who have been betting on Bitcoin in so-called short positions. A trader often uses margin or borrowed money to take his short positions, and positions can be forcibly closed by brokers if the market moves against them in a process called liquidation.
More than $355 million in short Bitcoin positions have been liquidated since Jan. 11, when Bitcoin fell below $17,500, according to crypto data firm Coinglass. According to Coinglass, the entire crypto industry wiped out $1.1 billion in shorts during the same period.
Still, more people are still shorting bitcoin than making bullish bets that the price will continue to rise.
According to Coinglass data, “long” bets on bitcoin outnumbered “short” bets in the five days from Jan. 11 to Jan. 15, when bitcoin surged 20%. By Monday, however, that trend had changed, with more than 50% of his total Bitcoin perpetual futures positions deficient in Bitcoin.
If Bitcoin continues to rise, it could be a sign of more pain for the bears. Alternatively, it could be an indication that the market thinks there is plenty of momentum right now, and that prices may moderate their gains slightly.
Please contact Jack Denton at jack.denton@barrons.com.
