Bitcoin [BTC], the first and largest cryptocurrency in the market, has been in the news since it breached the $5,000 mark. This breach contributed to several other coins gaining momentum in the market, with many rising by double-digits. Notably, Bitcoin continued to move upwards, with the 24-hour difference still in green.
Interestingly, the unforeseen rise of the coin had a negative effect on short traders as several positions were liquidated in a short span. According to reports, the $5,000 breach resulted in the liquidation of over $400 million shorts on BitMEX, a Bitcoin Mercantile Exchange. According to a post on Reddit, around $30 million in shorts were closed on Bitfinex, a leading cryptocurrency exchange platform, a 27% drop approximately.
Notably, the drop was the lowest of Bitcoin shorts for over a year, with March 2018 recording the same level as the current one.
Richard Heart, a Twitter user, commented,
“[…] someone closed 5k
#Bitcoin of shorts at $5,255 without hitting the order book (closed into his own account.) That’s $26,275,000 of shorts you can’t squeeze anymore.”
Short sellers, contrary to long sellers, make a profit by borrowing funds when the Bitcoin market is following a bullish trend, following which the assets are sold in the market. These assets are then recovered when the Bitcoin market follows a bearish trend. Contrarily, long sellers are those that profit by selling their assets when the market is following a bullish pattern and buy when the market is following a bearish market.
Zatline, a Redditor, said,
“If leveraged shorts are low meaning nobody profits if prices crash thats usually when matkets tend to crash .. this is more bearish than bullish”
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