Bitcoin short sellers face risks as prices approach $70,000

Market analysis shows potential liquidation of Bitcoin shorts

by Faruk Imamovic
Bitcoin short sellers face risks as prices approach $70,000
© Getty Images/Dan Kitwood

The world of Bitcoin trading is witnessing a tense phase as short sellers brace themselves for potential losses if the cryptocurrency revisits its recent high of $70,000—a price point it last touched just 12 days ago.

A significant reversal in Bitcoin's price could lead to a drastic shake-up in the market due to the volume of short positions currently held.

The high stakes of bitcoin shorting

According to data from CoinGlass, a staggering $1.67 billion worth of Bitcoin short positions are poised for liquidation should the price reach $70,000 again.

This is a notable increase from the current price of $65,136, which itself would require a 7.46% jump to hit the $70,000 mark. The last time Bitcoin traded at this level was on June 8, and the market has been highly volatile since.

Crypto trader Ash Crypto commented on the precarious situation on June 17 via an X post, noting the "insane amount of Bitcoin short liquidations piling up at the topside." This sentiment is echoed by Joshua Jake, CEO of Discover Crypto, who remarked on the current bullish sentiment in the market and the likelihood of an imminent bounce due to the stacked liquidations of both Bitcoin and Ethereum.

Market dynamics and predictions

The dynamics of Bitcoin's open interest (OI), which represents the total value of all unsettled Bitcoin futures contracts, also tell a story of fluctuating market sentiment.

After peaking on June 7 at an all-time high, Bitcoin's OI has dropped by 10.99% to $33.55 billion. Despite this decline, the OI is still 82% higher than it was at the beginning of the year, indicating a growing interest in the market.

This surge in Bitcoin’s OI earlier in June, which saw an increase of over $2 billion in just three days, led many traders to anticipate a potential whipsaw effect on Bitcoin’s price. Crypto analyst Willy Woo suggests that a major "liquidation wipeout" could actually benefit the market by setting the stage for Bitcoin to reach new all-time highs.

Woo explains that the market still needs to endure some "pain and boredom" before it can break previous records, a sentiment similarly expressed by Julien Bittel, head of research at Global Macro Investor, who refers to the current market phase as "The Boring Zone."