Hope is by the end of 2023 Bitcoin (BTC) will touch $30,000 Short Squeeze Scenario

Bitcoin believers firmly claim that it is on the way to 100K irrespective of the ups and downs.  There is no CEO to increase the prices.  But still, BTC holders claim the party is not over yet. The hope is that by the end of 2023 BTC will touch $30,000. The reality is that nobody knows anything about the ways and movements of Bitcoin and bulls. It is all around hope and expectations.  So, anyone in to BTC should be doing their own research about BTC all the time.

BITCOIN (BTC) INSTITUTIONAL SHORT SQUEEZE

There is a bullish news about Bitcoin.  This will create a situation of short squeeze.

Short squeeze is a situation where bullish news about BTC will push the price higher because short sellers are trying to profit out of the short-term price rise.

However, after selling short – some may want to buy back and cover their losses due to liquidations.  When many investors do this act of selling and many buying for higher price the momentum will build and the price will go sharply higher in the process of live momentary market dynamics.

Short sellers bail out to cut their losses as they cannot afford to hold the BTC for long as they might need money for other reasons.  Also, they will want to buy back BTC again. Contrarian investors during this time will try to anticipate a short squeeze and they wait for this time, and they buy more BTC.

A short squeeze is bad news for short sellers who hold BTC and are willing to sell not able to withstand the price fluctuation.  It is good news for investors who are going long with BTC and are willing to stack more BTC.

When there is a situation of short squeeze several retail BTC holders are forced to sell and this is where those who are in for the long-term buy.

SCENARIO OF SPECULATIVE INVESTORS

When the BTC price is falling you borrow to buy more Bitcoin so that you can stack more.  Probably you are a speculative investor in and out to make profits (or) you have given your BTC in collateral for a loan.  You expect the market to be bearish and you want the BTC price to fall.  Meanwhile, many other people just like you gave BTC in collateral or purchased BTC with a loan.

The value of BTC is going down and you need to repay the loan to sustain the funding cycle and to be in the Bitcoin investment game and to avoid liquidation fee losing money further.

In a tight trading trend, the price might not fall.  And, meanwhile if you do not repay your loan, for instance even if you have given your BTC as collateral, your collateral might be taken away from you, and you will lose your BTC completely.  Now, you have to pay a liquidation fee. No way out – you have to sell you are forced to sell. BTC holders who give their BTC in collateral or those who borrowed to buy BTC will be in trouble when the market is not doing great.

So, people who have real interest in the market that want “short speculative money” while also risking a margin call or for some other reason, try to get out of the market by selling – despite wishing they were able to HOLD Bitcoin.

Thus, some holders sell to make profit generated from such short squeeze as this might be higher than the transaction costs and they will be to still stay in the game to come back and buy.

These kinds of short squeeze appear:

1. When an asset is relatively illiquid.
2. When it is not traded very often.
3. When a lot of short positions have been opened.