Recently, it was reported that the bitcoin price briefly rose above $10K, only to lose about $600 just a few moments later. It appears this move has had monster-sized effect on BitMEX, a trading exchange based in Seychelles in Africa.
BitMEX Sees Heavy Buy Liquidations Following the BTC Spike
This move ultimately caused approximately $133 million of buy liquidations on the trading platform. This is the highest number since October of last year. Buy liquidations occur when those taking part in a transaction believe that the currency is about to fall or drop in some way. They thus force short positions to shut down. This later causes a huge burst in demand for whatever asset or commodity is in question, in this case bitcoin. The process can sometimes be referred to as a “short squeeze.”
BitMEX ultimately saw more than $400 million in bitcoin shorts closed on its trading platform. Similar behavior was seen on various other exchanges, such as Huobi Global, FTX and Binance, the largest and most popular exchange in the world in terms of daily trading volume. Approximately $120 million of the $133 million in buy liquidations occurred just after BTC hit the $10,000 mark.
Asim Ahmad – co-chief investment officer at Eterna Capital in London – explained in an interview:
BTC has spent only a little bit of time above the $10,000 level in its history. In the last year, every time we have gone above $10,000, we haven’t been able to hold the level for long. The massive short squeeze indicates a lot of people didn’t expect the cryptocurrency to test and breach the $10K level this quickly… It’s hard to say if this is the moment that we never see prices below $10K again.
Ahmad, for the most part, is correct. Bitcoin first rose above $10K in November of 2017. This would ultimately be the starting point to the currency’s sudden rise during the Christmas season to just under $20K per unit. However, by the time February of next year had rolled in, things had taken a major turn for the worse.
In 2019, the currency rose above $10K during the summer months, but this only lasted through September after Bakkt – the ICE-based institutional crypto trading platform – opened to a measly debut. In 2020, a few spikes beyond $10K have occurred here and there, but none have lasted more than a few days or weeks at a time.
This May Be the Time When BTC Stays Above $10K
However, according to Chris Thomas – head of digital assets at Swiss Quote Bank – this could be about to change. He recently stated:
Psychologically, both the $10,000 and the longer-term trendline on the daily chart that we’d failed to break several times have now become support levels. There’s a little resistance around $10,500, then our next targets are $12,300 and $13,000.