{"id":16574,"date":"2023-01-17T22:46:31","date_gmt":"2023-01-17T22:46:31","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/rising-bitcoin-prices-cause-cascade-of-short-liquidations-highest-ratio-of-short-vs-long-wipeouts-since-july-2021-market-updates-bitcoin-news\/"},"modified":"2023-01-17T22:46:31","modified_gmt":"2023-01-17T22:46:31","slug":"rising-bitcoin-prices-cause-cascade-of-short-liquidations-highest-ratio-of-short-vs-long-wipeouts-since-july-2021-market-updates-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/rising-bitcoin-prices-cause-cascade-of-short-liquidations-highest-ratio-of-short-vs-long-wipeouts-since-july-2021-market-updates-bitcoin-news\/","title":{"rendered":"Rising Bitcoin Prices Cause Cascade of Short Liquidations, Highest Ratio of Short vs. Long Wipeouts Since July 2021 \u2013 Market Updates Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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The top two crypto assets have risen significantly in the past seven days, with bitcoin jumping 22.6% and ethereum increasing 18.6% against the U.S. dollar. According to market data, both crypto assets saw the largest increase on Saturday, Jan. 14, 2023. The sudden spike in value caused the highest ratio of short liquidations vs long liquidations since July 2021, according to a recent Alpha report from Bitfinex.<\/strong><\/p>\n

Bitfinex Analysts See a Cautious Approach From Bulls as Market Remains Highly Illiquid Despite Price Surge<\/h2>\n

Bitcoin (BTC)<\/a> and ethereum (ETH)<\/a> prices have risen significantly against the U.S. dollar, causing a cascade of short liquidations on Jan. 14. The cryptocurrency exchange Bitfinex discussed the matter in its most recent Alpha report #37<\/a>. When a trader opens a short position against bitcoin or ethereum, they expect the price of the crypto assets to decline in the future.<\/p>\n

However, if bitcoin\u2019s price climbs quickly, short traders either get liquidated or must buy back the bitcoin at a higher price. When the price of BTC<\/a> or ETH<\/a> rises too much, short sellers are liquidated, meaning their short position is closed by the crypto derivatives exchange. According to Bitfinex researchers, a significant number of liquidations took place on Jan. 14.<\/p>\n

\u201cShort liquidations fueled the entire increase in bitcoin and ethereum,\u201d Bitfinex analysts said in the Alpha report. \u201cShort liquidations at $450 million outweighed long liquidations by a ratio of 4.5. On Jan. 14, the market saw the highest ratio of short liquidations vs long liquidations since July 2021,\u201d the analysts added. They also mentioned that the liquidation figures and short vs long liquidation ratio was even more severe among altcoins.<\/p>\n

\"Rising<\/p>\n

Bitfinex analysts further detailed that a retraction in bitcoin\u2019s price still remains probable. \u201cWhile it is typical for bear markets to have a complete wipeout of shorts,\u201d the analyst noted. \u201cThe entire rally has been built on the backbone of continuous market shorts keeping funding low and prices being pushed up by forced liquidations and running stops. So, a pullback in bitcoin price remains a possibility.\u201d<\/p>\n

The Alpha report adds:<\/p>\n

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Although the move might be interpreted as organic, it is entirely engineered by limited traders in the market, which is evident from the market depth remaining the same week-on-week. The price impact from market orders is also the same as last week for [bitcoin], and there is little change for altcoins. This means that even with the leg up, the market remains highly illiquid, and with the sharp fall in open interest over the weekend, a pullback might be expected with a cautious approach from bulls.<\/p>\n<\/blockquote>\n

Crypto Supporters Debate the Gartner Hype Cycle Position and \u2018Disbelief\u2019 Phase<\/h2>\n

When the liquidations took place three days ago, Bitfinex reported that Bybit experienced the largest short open interest wipeout since its inception. \u201cThe negative funding rates below $16,000, followed by increasing aggregated long-side open interest for [bitcoin], were the driving force behind the price surge,\u201d the researchers explained.<\/p>\n

The recent rise in bitcoin and ethereum prices has caused many people to speculate whether the crypto bottom is in. On Jan. 16, 2023, bitcoin analyst Willy Woo shared an illustrated image of the Gartner Hype Cycle and said<\/a>, \u201cI suspect we are in the \u2018disbelief\u2019 phase of the cycle.\u201d<\/p>\n

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Gartner Hype Cycle or the Psychology of a Market Cycle chart shared by bitcoin analyst Willy Woo on Jan. 16, 2023.<\/figcaption><\/figure>\n

A number of people disagreed with Woo\u2019s opinion about being in the \u2018disbelief\u2019 phase of the cycle. Crypto proponent \u201cColin Talks Crypto\u201d replied<\/a> to Woo, saying, \u201cNo way.\u201d Colin further stressed that it would \u201cmean the typical bear market got massively shortened, (which is highly unlikely, especially in today\u2019s poor macro climate).\u201d The crypto supporter and Youtuber added:<\/p>\n

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It would mean a bitcoin 4-year cycle somehow magically became a 2-year cycle or something.<\/p>\n<\/blockquote>\n

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\nTags in this story
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Alpha report<\/a>, Altcoins<\/a>, Bear Market<\/a>, Bitcoin<\/a>, Bitcoin (BTC)<\/a>, BitFinex<\/a>, Bitfinex analysts<\/a>, Bitfinex research<\/a>, BTC Futures<\/a>, BTC Options<\/a>, BTC Shorts<\/a>, Bybit<\/a>, Colin Talks Crypto<\/a>, crypto assets<\/a>, crypto derivatives exchange<\/a>, Crypto proponent<\/a>, Disbelief phase<\/a>, Ethereum<\/a>, Gartner Hype Cycle<\/a>, Long liquidations<\/a>, Macro climate<\/a>, Market Data<\/a>, Market depth<\/a>, Market orders<\/a>, Open Interest<\/a>, short bitcoin<\/a>, short BTC<\/a>, Short liquidations<\/a>, Short position<\/a>, shorting bitcoin<\/a>, trader<\/a>, Willy Woo<\/a>, youtuber<\/a><\/div>\n<\/div>\n

What do you think about the Bitfinex Alpha report and the short liquidations that took place this week? Do you think we are in the \u2018disbelief\u2019 phase of the Gartner Hype Cycle? Let us know what you think about this subject in the comments section below. <\/strong><\/em><\/p>\n

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\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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