Bitcoin is Setting Up For a Violent Long Squeeze, Which May Trigger New Lows

Tony "The Bull" Severino

Last Updated: February 3, 2020 6:29 pm

3 mins read

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Bitcoin bulls across the crypto market have been celebrating their recent victories in pushing the leading cryptocurrency by market cap’s price higher and higher, busting through downtrend resistance and closing both the most recent weekly and monthly candles bullish.

But the victory dance could soon turn to sobs of remorse if a violent long squeeze that may be brewing happens and Bitcoin price crashes hard to new lows from current levels.

Recipe for Disaster: BitMEX Open Interest High, Funding Flip Coming, Longs Over Extended

Due to the fact that margin trading exchanges often dominate the crypto market, oftentimes what happens on these platforms can dictate or at least heavily influence Bitcoin price fluctuations.

Funding on BitMEX can influence the number of traders taking a certain position, and open interest on the platform reaching key levels often triggers an explosion in volatility.

With the funding rate staying positive throughout much of the recent rally in Bitcoin price, there is an extreme number of long traders in position at BitMEX trading on high leverage expecting Bitcoin to blast into a new bull market.

https://twitter.com/JacobCanfield/status/1224375408289816577?s=19

Violent Bitcoin Long Squeeze Could Crash Crypto to New Lows

With long positions outweighing by shorts two to one across all exchanges, the abundance of long positions could be used as fuel to push Bitcoin price lower.

After Bitcoin price rallied as much as over 40% throughout the past six weeks, many investors who bought the lows are sitting in substantial profits.

And with belief that the bull market is right around the corner, traders are likely over-leveraged and stubbornly letting their personal bias cloud their risk management strategies.

Together with profits ready to be taken, overly exuberant sentiment, open interest at the highest possible levels, and more, all it will take is a flip of the funding rate and Bitcoin to fall from current levels to potentially cause a violent long squeeze of epic proportions.

When one side of traders is “squeezed” it means that a powerful, surprise movement caught them off guard, forcing them to cover and close their positions, often at a loss, or taking whatever profit left that they can.

When long orders are closed out, a position of Bitcoin is then sold into the market. Together with longs covering their overextended positions and normal market selling and profit-taking, there’s a recipe for complete disaster brewing across the crypto market.

Bitcoin has built much support down to $6,400 where previous lows are set, however, the momentum generated from such a violent long squeeze could push Bitcoin price to local downtrend lows.

Another fall would mean that Bitcoin’s recent breakout was a false breakout, and the downtrend isn’t yet over.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.