Analyst sees good chances for a short squeeze on Bitcoin
A parabolic bull run could result
However, investors may have to be patient
The crypto market has plummeted since the late 2021 high. While Bitcoin, the oldest and largest digital currency in terms of market value, was able to set a record high of almost 70,000 US dollars in November last year, the price is currently only slightly above the 21,000 US dollar mark (as of July 25th). 2022).
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Ki Young Ju, CEO of data analysis service CryptoQuant, believes that Bitcoin is now facing a short squeeze. This is the shortage of supply of an asset that has previously been sold short in large numbers. On the stock exchange, investors can benefit from falling prices by selling assets short. This means that assets are sold that are not actually owned by the seller at the time – they are only on loan and must be returned to the lender at a later point in time. However, if, contrary to expectations, there is a sudden price increase, the open positions must be closed again. To do this, the so-called shorters have to buy the asset at high cost (short squeeze) in order to limit their losses. Then it can come to said scarcity and therefore to even more strongly rising prices.
Bitcoin short squeeze
Ki Young Ju tweeted in mid-July that he believes a bitcoin short squeeze is likely: “[Ich] wait for the big short squeeze. At the end of 2020, many people took short positions on Bitcoin and were liquidated in the $10,000-$20,000 range before the parabolic bull run began. Back then, 10 percent of hourly market orders were short liquidations. It’s currently around 1 percent,” Ki Young Ju wrote in a tweet.
This tweet caused such a stir in the crypto community that Ju felt compelled to clarify: “Let’s get this straight, I didn’t claim that the parabolic bull run is about to start. I’m just saying that it looks like like we’re nearing bottom and it’s now time to wait for the short squeeze to kick in. However, it could be a few months or years before the next parabolic bull run, there’s no telling.”
To be clear, I didn’t say that the parabolic bull run is about to start.
I’m just saying it seems close to the bottom, and it’s time to wait until this short squeeze event happens. It could be for like a few months or years for the next parabolic bull run, we never know.
– Ki Young Ju (@ki_young_ju) July 14, 2022
It remains to be seen whether the crypto market has already bottomed out given the ongoing bad news.
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