Ki Young Ju, the founder and CEO of blockchain analytics platform CryptoQuant, observed that while the last Bitcoin (BTC) cycle saw several long squeezes; the current one has not.
A long squeeze occurs when the price of an asset declines, forcing long position holders to liquidate their assets to prevent further losses, accelerating the price decline. Young Ju noted that four long squeezes occurred at $55,000 in the previous Bitcoin cycle.
Conversely, the current Bitcoin cycle has seen two short squeezes around $66,000. A short squeeze happens when the price of an asset increases, forcing short sellers to buy back their positions to prevent losses, driving the price even higher.
The CryptoQuant CEO stated on X (formerly Twitter) that the long/short squeeze ratio is a critical indicator of potential cascading liquidation events. This ratio, calculated as the ratio of hourly liquidation volume to the total taker volume, helps assess the market’s susceptibility to rapid price movements due to forced liquidations. A high long/short squeeze ratio increases the risk of cascading liquidations.
This cycle hasn’t had a long squeeze yet.
Long/short squeeze ratio can indicate a cascade liquidation event when high. (= hourly liquidation vol / total taker vol)
This year, #Bitcoin had two short squeezes at $66K. In the last cycle, there were four long squeezes at $55K. pic.twitter.com/bDtaTLphRl
— Ki Young Ju (@ki_young_ju) July 9, 2024
The absence of long squeezes in the current cycle, coupled with the presence of short squeezes, suggests demand for Bitcoin at higher price levels. However, Young Ju emphasized that he is neither bullish nor bearish on the data but neutral. He said:
“Interpretations vary: some see $55K as support due to four long squeezes in the last cycle, while others think we haven’t bottomed due to the lack of a long squeeze.”
As per CoinMarketCap data, at the time of publication, Bitcoin is trading at $59,000. The digital asset has fallen 15% in the last month. BTC dropped as low as $53,000 after the German government began selling its BTC. Additionally, the defunct crypto exchange Mt. Gox has initiated repayments to creditors. The firm has already distributed 47,229 BTC and is yet to transfer 94,771 BTC (roughly $5.6 billion).
Notably, the leading cryptocurrency has risen 2.70% in the past 24 hours, attempting to reclaim $60,000. Nevertheless, BTC is still 20% down from its all-time high of $73,000 reached in March.
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