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Sellers Step In As Bitcoin Soars, But Could Lead To Short Squeeze Higher

Tony Spilotro by Tony Spilotro
2 years ago
in BTC
Reading Time: 3 mins read
Advertisement

Bitcoin price nearly hit $13,000 today after an almost $1,000 intraday candle tapped the remaining bear market resistance keeping new all-time highs at bay a little while longer.

With so many traders in profit, short-sellers have stepped up in a major way, opening millions in positions betting big that the recent uptrend will soon reverse. However, with so much money on the line, a potential setup for an epic short squeeze could keep the cryptocurrency trucking right along – which these short sellers might actually be perfectly fine with. Here’s why.

Bitcoin Aims For $13,000 Next After Bullish $1,000 Intraday Impulse

Days ago, an analyst claimed that once Bitcoin got going, it would be like a bulldozer. After revving its engines on last week’s bullish news that Square Inc. had purchased over 4000 BTC, Bitcoin exploded like the wrecking machine it is known to be with an over $1,000 breakout candle.

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The move sent the cryptocurrency flying to a new 2020 high but stopped short of $13,000 and before retesting the 2019 peak. Almost a year and a half later, the resistance level has never been retested.

📉 $2,474,759 worth of #bitcoin SHORTED @$12673.9 [21/10/20 15:22:10]
💴💴💴💴💴💴💴💴💴💴
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🗣️Stakening is here!🥩🥩🥩 – LUKACACIC

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And it might not get there, according to whales shorting Bitcoin on ByBit. A position worth $2.5 million in BTC was taken before the cryptocurrency made its last push higher.

Bears Are Bulls In Disguise: Short Sellers Hedge Spot Holdings

A TD 9 sell setup perfected with the last 4-hour candle open, causing the short-term pullback. As of right now, the price of Bitcoin is higher than the whale’s short entry.

If Bitcoin price continues to rise, this whale and others that opened up sizable shorts could be forced to cover and squeeze prices soaring much higher.

bitcoin btcusd coinbase

4H TD 9 sell setup triggered as short-sellers hedge spot Bitcoin holdings | Source: BTCUSD on TradingView.com

If this occurs, $13,800 could be taken, and a higher high in Bitcoin finally set. Even if a pullback later resulted, after Black Thursday’s higher low, a high timeframe higher high would be telling that a new bull market has begun.

However, Bitcoin could also turn around here, as these short traders are betting on. With the US election just two weeks away, markets could get hairy. Stocks have already started to fall, and while Bitcoin appears to have decoupled, a rug pull cannot be ruled out.

Related Reading | 21 Million BTC: How PayPal Active Users Underscores Bitcoin Digital Scarcity

Short sellers could also not be bears at all. Smart money traders may simply be hedging their spot holdings in BTC, after accumulating for months on end. A short trade keeps holding’s value high if prices begin to drop, yet if Bitcoin continues to rip, what little is lost in a well-placed stop loss is well worth the cost of some peace of mind and capital protection.

Spot holdings increasing as the cryptocurrency climbs would offset any risk presented by getting stopped out at a loss on a short. That’s why shorting resistance, is such a no brainer in terms of risk versus reward.

These sellers do risk squeezing prices higher if they have to close their shorts or are stopped out. But while it happens, they’ll be smiling all the way to the blockchain, as their crypto holdings will have increased all the while.

Featured image from Deposit Photos, Chart from TradingView.com
Tags: bearsbitcoinbtcbtcusdbtcusdcBTCUSDTcryptoshort sellersxbtxbusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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