Bitcoin’s recent price increase of over 10% – after Elon Musk added “Bitcoin” to his Twitter bio – has put a lot of selling pressure on the derivatives market.
The sharp rise to a 10-day high of $ 38,020 sparked short liquidations worth $ 387 million on major exchanges such as Binance, Bitfinex, BitMEX, ByBit, Deribit, FTX, HuobiDM and OKEx.
The crypto leader is trading at $ 37,390 as of press time, a gain of more than 15% from the low of $ 32,000 during the morning European session.
Today’s short liquidation is the largest since Jan. 2, when the exchanges closed $ 575 million worth of short positions, according to data provider Coinalyze.
Forced closing of short positions occurs when the price moves above a predetermined threshold, which signals the liquidation engine to balance or close the positions. A massive short squeeze like this one often puts prices under pressure, causing an upward trend.
Data suggests that the market was bearish early Monday and some observers expected prices to decline due to increased inflows into the exchanges.
Sentiment turned upbeat, however, after Musk changed his Twitter bio and tweeted, “Looking back, this was inevitable.” The Tesla and SpaceX CEO, who has been known to dislike short sellers, may not be unhappy that he was indirectly involved in the liquidations.
Google is looking for “Bitcoin,” a barometer of widespread interest that has soared after Musk’s cryptic endorsement of Bitcoin. It remains to be seen whether increased interest leads to more purchases and greater price gains.
“I assume that the US session will try to process the news in lockstep,” Vishal Shah, options trader and founder of the Alpha5 futures exchange, told CoinDesk. “Usually such things are answered with a subdued response. But with that in mind, I think it could be ripe for a sequel. “
So Bitcoin is looking north after piercing a two-week bearish trendline on the daily chart. Resistance is at $ 40,112 (Jan 14 high) followed by a psychological level of $ 42,000.