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Crypto news: BTC short squeeze “likely” in near term

By Daniela Ešnerová


Updated

Illustration of a bull and bear pushing and resisting a bitcoin logo
Bitcoin (BTC) short traders may find themselves candidates for a near-term squeeze, according to Glassnode – Photo: Shutterstock

With bitcoin (BTC) open interest at an all-time high, its price declining, and some indicators pointing to bearish sentiment in the market – the Crypto Fear and Greed Index  shows the market is experiencing extreme fear – some market watchers have hinted at a possibility of a short squeeze of traders shorting bitcoin in the near-term future.

In a report published today, blockchain analytics firm Glassnode said: “Since November, bitcoin futures has been in a regime of long liquidation dominance, where traders betting on ‘Number Go Up’ are consistently on the losing side. This value recently spiked to a local high of 69%, its highest value since the May 2021 crash.

“Factoring in this observation with the aforementioned rise of open interest into declining price, and the probability of a local reversal is increasing. Short traders, who have not been punished for taking on increasing risk, may find themselves candidates for a near-term squeeze.” 

The report echoed similar sentiment from another cryptocurrency analytics firm, IntoTheBlock, earlier this week. “Potential short squeeze ahead,” the company tweeted. “The ratio of bitcoin’s open interest relative to its market capitalisation has reached the highest level in over a year. The last time the open interest/market capitalisation ratio increased while bitcoin’s price decreased was in July 2021, which marked the bottom.”

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DOGE/USD

0.14 Price
-2.130% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

XRP/USD

0.61 Price
+1.950% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

SOL/USD

179.94 Price
-1.860% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

BTC/USD

67,572.55 Price
-0.190% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

Other crypto news: 

  • American socialite Kim Kardashian and boxer Floyd Mayweather are among those being sued over their promotion of cryptocurrency EthereumMax, the legal intelligence website Law360 reports. “Defendants touted the prospects of the company and the ability for investors to make significant returns due to the favorable ‘tokenomics’ of the EMAX Tokens,” investor Ryan Huegerich alleges in his suit, according to Law360. “In truth, defendants marketed the EMAX Tokens to investors so that they could sell their portion of the float for a profit.”

Quote of the day:

Andre Drummond NBA player, team Philadelphia 76ers

“I’m excited to announce I’m taking part of my salary in BITCOIN.”

Top coins by market capitalisation

As of 11:40 GMT:

Winners and losers

  • Near protocol (NEAR) and cosmos (ATOM) added 12.34% and 4.06% respectively over the last 24 hours, making them the biggest daily gainers out of 50 biggest virtual tokens
  • Sandbox (SAND), helium (HNT) and uniswap (UNI) lost 4.83%, 4.20% and 3.72% respectively.

Read more: Crypto selloff continues as investors remain bearish

Markets in this article

BNB/USD
Binance Coin / USD
595.26 USD
-11.51 -1.920%
BNB/USD
Binance Coin / USD
595.26 USD
-11.51 -1.920%
BTC/USD
Bitcoin / USD
67572.55 USD
-131.05 -0.190%
ETH/USD
Ethereum / USD
3443.39 USD
-55.28 -1.580%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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