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- $1.67 Billion at Stake: Shorters Won't Allow Bitcoin to Hit $70K
$1.67 Billion at Stake: Shorters Won't Allow Bitcoin to Hit $70K
What To Do Now Before Bitcoin Come Crashing Down Again
Imagine Bitcoin hitting $70,000, causing billions in losses for those betting against it. This isn't just a possibility; it’s a real risk. With $1.67 billion in short positions at stake, we need to understand what could happen next.
1. ‘Insane amount’ of Bitcoin shorters are hoping it won’t go to $70K
Bitcoin has tested around the $70k to $72k mark several times, forming a strong resistance. Source: tradingview
Recently, Cointelegraph reported on the precarious situation for Bitcoin short sellers. If Bitcoin reaches $70,000, $1.67 billion in short positions could be liquidated, shaking the market. Currently, Bitcoin is around $65,136, just 7.46% away from this critical point.
In this article, I’ll break down what this means for you, explain liquidations, and explore how this price point could impact your investments. By the end, you’ll know how to stay ahead and make smart decisions with your crypto investments.
2. The Looming Impact: What Does This Mean for Crypto Investors?
Understanding Liquidations
Liquidations happen when an investor’s position is closed because they can’t meet margin requirements. In simple terms, short sellers bet that Bitcoin’s price will drop. If it goes up instead, they face forced liquidations, causing a market ripple effect.
Why Shorters Can Lose Money?
1. Increased Speculation
Bitcoin's growing popularity means more people are betting on its price, leading to higher volatility and higher price.
Bitcoin open interest has dropped 10.99% since reaching its ATH on June 7. Source: CoinGlass
Example: Open interest in Bitcoin futures is up 82% since January 1, indicating more market activity and potential volatility. Open interest represents the total number of outstanding derivative contracts, such as futures and options, that have not been settled. A higher open interest indicates more capital flowing into the market and potentially higher volatility. However, do note that Bitcoin open interest has dropped 10.99% since reaching its ATH on June 7.
2. Market Sentiment
Positive news and investor optimism often push Bitcoin’s price higher, putting pressure on short sellers.
Example: In 2017, Bitcoin surged from $1,000 to nearly $20,000, driven by positive sentiment and speculative investments. This caught many short sellers off guard, leading to significant liquidations and further price spikes. Don’t think they want this to happen again.
3. Institutional Involvement
More institutions are getting involved in crypto, and their large trades can significantly impact prices.
Example: When Tesla announced its $1.5 billion Bitcoin investment in 2021, Bitcoin’s price jumped by about 20% in one day, illustrating how institutional moves can dramatically affect market dynamics. However, big institutions are buying up Bitcoin slowly to prevent price spike and buying at high prices.
3. Speculative Scenarios: How Bitcoin Reaching $70,000 Could Impact Your Investments
Potential Gains and Risks
If Bitcoin hits $70,000, short positions will be liquidated, causing a price spike. For long-term holders, this means potential gains. But it also brings the risk of increased volatility and possible market corrections.
How Your Portfolio Could Be Affected
1. Gains for Long Positions
If you hold Bitcoin, you could see significant gains after Bitcoin clears resistance.
2. Risks for New Investors
New investors might buy at a peak, risking losses if the market corrects.
Tip: Enter the market cautiously and avoid buying into hype. Look at past patterns like the post-2017 crash to avoid buying at high points.
3. Higher Probability That Price Corrects Downwards Even Before Hitting $70k
At the moment, Bitcoin looks bearish short term wise. Falling Bitcoin’s price can cause rapid price plunges in all other cryptocurrencies.
Impact: Other cryptos like Ethereum, Solana, and Litecoin might also see increased volatility, offering both opportunities and risks.
Conclusion
How This News Affects Your Investments
Understanding the implications of Bitcoin reaching $70,000 is crucial. It could mean big gains for long-term holders if it does really pans out. But this can also brings risks of market volatility and corrections for shorter term traders.
3 Wise Actions for Educated Investors
Subscribe to Crypto Profit 101 Newsletter: Stay updated with the latest insights and expert analysis to make informed decisions. Subscribing gives you access to timely updates that help you navigate the volatile crypto market confidently.
Expect Bitcoin to Be Bearish and Move Sideways: After the initial surge, Bitcoin might move between support and resistance levels. Study cryptos that can be shorted to capitalize on downturns. Understanding market trends can help you benefit from both ups and downs.
Do DCA or Prepare to Short: Use dollar-cost averaging (DCA) to spread your spot’s entry prices over time, reducing risk especially if prices are falling. If you prefer shorting futures, use technical analysis to find the best entry points. This approach ensures you’re ready for market fluctuations and can maximize returns while minimizing risks.
Final Thought: As the crypto market evolves, staying informed and making strategic decisions is crucial. Will Bitcoin's rise to $70,000 trigger a market crash or present a golden opportunity? The answer depends on your ability to navigate the market with foresight and caution.
By understanding these dynamics, you can turn confusion into clarity and make smart investment moves that align with your financial goals. Don’t let market volatility scare you; use it as a tool to build a strong and profitable investment strategy.
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