A speedy improve within the quantity of leverage coming from the bitcoin (BTC) futures market might imply that both a brief or lengthy squeeze shall be seen “within the extra quick time period,” based on on-chain analytics agency Glassnode.
“While futures open curiosity continues to be a way off all-time-highs, speedy will increase in leverage can point out a clustering of stop-losses and liquidation ranges in shut proximity to the present value,” Glassnode wrote in its final The Week Onchain report for 2021.
It added that this improve in leverage “provides greater possibilities to a possible quick, or lengthy squeeze within the extra quick time period.”
In the meantime, one analyst indicated in the present day that the present market situations make a bearish lengthy squeeze extra doubtless than a brief squeeze.
“Now funding rising the previous few hours as value grinding down..,” bitcoin analyst at mining agency Blockware Options, Will Clemente, stated, including that these situations are extra favorable for a protracted squeeze than a brief squeeze.
A leverage squeeze refers to an occasion the place value strikes rapidly both down or up, with the transfer exacerbated by leveraged merchants whose buying and selling positions are getting liquidated as value strikes towards them. A protracted squeeze refers to quickly falling costs, whereas a brief squeeze refers to quickly rising costs.
And whereas Glassnode did warn that there’s a threat of a leverage squeeze within the close to time period, the agency additionally famous that buying and selling volumes within the bitcoin futures market have gone down.
The autumn in buying and selling quantity has been notably notable in December, with the 7-day shifting common of the amount now being 16% beneath the extent at first of the yr.
“Thinner quantity, and rising open curiosity (in a concentrated alternate) is a mixture that may be favorable to at the very least a localized leverage squeeze over the approaching weeks,” the report stated, though it admitted that decrease buying and selling exercise is often seen in direction of the tip of the yr.
At 08:25 UTC, BTC stood at USD 49,426, down 3% over the previous 24 hours and up 5% over the previous 7 days.
– Bullish Options Data Gives Hope to Ethereum, Bitcoin Investors
– Arthur Hayes Tells Crypto Traders ‘It Pays to Wait,’ Stronger USD Coming