Critical Short Squeeze Alert in Bitcoin (BTC): Chief Economist Warns

Bitcoin (BTC) price broke the $42,000 mark on Monday and today broke through $44,000 for the first time in over a year, prompting the liquidation of a significant number of leveraged positions.

BTCM Chief Economist Youwei Yang identified $45,000 as the next key resistance level for Bitcoin, suggesting that the likelihood of a short squeeze increases above this threshold. “Bears may face the risk of a short squeeze if Bitcoin breaks above $45,000, the next important resistance level,” Yang said.

A short squeeze is defined as a market event that triggers a rapid rise in prices in a stock or any asset. It typically occurs when the asset is significantly shorted, meaning many investors are betting that its price will fall.

Yang also noted existing highly leveraged positions that could be reset if the market becomes increasingly volatile. “There is currently a possibility of higher market volatility, such as both a short squeeze and long liquidation at the same time in a short period of time,” Yang added.

Bitfinex analysts, on the other hand, highlighted two Bitcoin price levels that saw significant liquidations due to recent fluctuations in the market and said: “We can currently see large short liquidations at $ 41,950 and then at $ 42,200.”

Analysts had suggested that above these levels, the Bitcoin price could experience a “bullish breakout” due to forced liquidations that short investors are forced to buy to close their trades.

*This is not investment advice.