The Bitcoin price just exploded to $28,500 after hovering around $27,000 last night. With that price, Bitcoin reaches its highest level in five days and of course the optimism is immediately back. With the abrupt rebound in prices, a number of traders with short positions were forcefully liquidated and blown out of their positions.
Bitcoin blows shorts
At the time of writing, there are already for today Liquidated $20 million worth of shorts and if the price continues in this way, that number can still rise considerably. Skew is an analyst who specializes in this type of data and who also notes that we are currently seeing a lot of fireworks again.
“It looks like the previous bounce was heavily shorted and those shorts have just been blown off the books,” he said in his commentary.
When a trader opens a short position on Bitcoin, he is essentially borrowing Bitcoin, selling it and returning it at a later date.
As soon as the price starts to rise, these types of traders get into trouble and have to buy the Bitcoin back for more money. If that reaches a certain limit, many short positions may be liquidated at the same time and we may have one short squeeze to get. That seems to be the case again with this price explosion.
Serious resistance
Bitcoin has now managed to tap the price of $ 28,500, but that does not mean that the road to the price of $ 30,000 is now completely open. If Skew is to be believed, it will take a serious amount of buying power to overcome the hurdles currently in the order books.
“There are many sales orders ready between $28,000 and $30,000. It takes a fair amount of purchasing power to push through this,” said Skew.
Incidentally, we should not attach too much importance to the order books. After all, it is possible to place many orders in the books and then remove them from the order book as soon as the price approaches. In addition, Bitcoin has regularly managed to eat through these types of sales walls in the past.