An increasing number of traders entering new long positions was the “fuel” behind Bitcoin’s slump to $60,000, according to Bitcoin analyst Willy Woo.
A “cascading long squeeze” of Bitcoin could explain the asset’s recent drop to 53-day lows as miners continue to sell, according to a Bitcoin analyst.
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“Speculators kept adding to new long positions, just adding more fuel for more liquidations in a cascading long squeeze,” pseudonymous Bitcoin
BTC $61,203 analyst Willy Woo wrote in a June 24 X post.
A long squeeze happens when a large number of long-position investors (those betting on a rise in Bitcoin’s price) start selling their holdings as the price falls to cut their losses. This causes the price to drop even more, leading to a cascading effect on other long-position holders.
The opposite is referred to as a short squeeze. This term became well-known when retail traders pumped up the price of GameStop stocks in January 2021, forcing large short investors to buy back the stock at a higher price to limit their losses and thus pushing the stock price up to meteoric heights.
According to CoinGlass data, a dip below $60,000, similar to June 24 when Bitcoin fell below $59,000, would wipe $1.16 billion in long positions. However, a similar 3.73% upward swing would erase $2.18 billion in short positions, showing that traders are currently more confident in the price going downward.
“Worth a breakdown of what’s happening given the fear in the market,” Woo added.
It comes as the Crypto Fear and Greed Index — which measures market sentiment for Bitcoin and the broader cryptocurrency market — tanked to its lowest score in nearly 18 months.
Post-halving miners capitulation continues
Woo also pointed out the ongoing “post-halving miners capitulation” event, which is a theory that miners will turn off their hardware and sell their coins if Bitcoin falls below a certain price and mining becomes unprofitable.
“Superimposed on this liquidation squeeze, we have a post-halving miners capitulation,” said Woo, explaining that miners selling Bitcoin could pay for needed upgrades while the weakest miners are closing shop and being liquidated.”
On June 25, Bitcoin’s price is trading slightly above the crucial $60,000 level, at $61,320 at the time of publication, according to CoinMarketCap data.
On June 24, Bitcoin saw its biggest daily decline in over three months, dropping 6.26% to $58,890, according to pseudonymous crypto commentator Bitcoin Archive.
“The biggest daily discount in price for 97 days,” they wrote on June 24.
Jan3 CEO Samson Mow believes the “Bitcoin dip is purely sentiment and fear driven, not from selling off large holdings.”
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