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Bitcoin Shorts Worth $260M Liquidated in Market Frenzy
- Bitcoin shorters have been heavily liquidated in December, losing nearly USD $260M (AUD $396M) due to the coin’s sustained price increase.
- High-volume crypto exchanges like Binance and OKX have been the major sources of these liquidations.
- Bitfinex analysts predict Bitcoin will reach between USD $60-75K by the end of 2024.
Most in the crypto community have been buoyed by Bitcoin’s outstanding month, as the coin has soared to hit its 20-month high. However, not everyone will be enjoying the coin’s prolonged uptrend. Bitcoin shorters – essentially betting against BTC price rises – have been consistently smashed in the latter half of 2023. Since December alone, nearly USD $260M (AUD $396M) has been liquidated due to the coin’s continued rally.
What Is Shorting and How Do Liquidations Work?
Shorting is essentially when investors sell an asset with the intention of buying it back at a later date for a lesser price. Therefore, shorters are gambling that the value of the asset will drop in the future. Such contracts can be made with leverage, meaning that potential profits are amplified – but so too are potential losses.
However, if the short is proven wrong and the asset continues to grow in value (as is the case with Bitcoin), exchanges will often be forced to liquidate. This means the company forces the shorter to exit their position, as their overall balance can no longer support the leveraged trade.
According to data from CoinGlass, those shorting Bitcoin have not had a particularly enjoyable December. On Monday, about USD $70M (AUD $106M) of Bitcoin shorts were liquidated, only to be compounded by an even bigger liquidation of USD $90M (AUD $137M) the very next day.
The majority of liquidations have come from high-volume crypto trading exchanges like Binance, OKX and Bybit.
The tides may be turning slightly – at least for the short-term — as BTC encounters its first red day in a while, down approximately 1% over the past 24 hours. However, after the massive weekly gains, a period of consolidation for the coin is likely a good thing as traders catch their breath and gear up for the holiday season.
Analysts from the popular crypto exchange Bitfinex believe 2024 will be a big year for Bitcoin:
While some market participants are eyeing $100,000…we believe the Bitcoin price will reach between $60,000 and $75,000 by the end of next year.
Bitfinex Analysts via The Block
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
