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Bitcoin (BTC) ready to punish bears: what if the short squeeze was coming?

The big short… squeeze? – Bitcoin is hovering around $40,000 and remains bearish if we look at the short term. It will be necessary for buyers to come forward to turn the trend in daily. Bitcoin is falling, certainly, but it is possible that it will prepare us for a large-scale movement as we were able to witness at the end of July 2021. Bitcoin had risen 45% in just nine days. Is it possible to see an equivalent movement in a few weeks? Are we witnessing a bearish trap? A scenario that could please investors…

This analysis of the price of bitcoin (BTC) is offered in collaboration with Coin Trading and its algorithmic trading solution finally accessible to individuals.

Bitcoin and leverage

To understand the scenario envisaged in this article, it is necessary to understand some technical aspects.

Most of the time, an investor buys his bitcoins on the spot market. It is simply the place, on a platform, that allows the purchase or sale of Bitcoin. If I buy a bitcoin on the spot market, I own a bitcoin, and I can sell or store it as I wish.

Some traders use leverage. For this, traders use what is called margin trading. It is an activity in its own right, and still very different from the spot. To better understand leverage, let’s take an example:

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Paul wants to use x2 leverage. He deposits on the margin trading platform 100 euros. The platform lends him 100 euros. He then speculated with 200 euros. Two choices are available to him: the purchase (long)or the sale (short).

  • the long: if an actor is long, he believes that the price will go up. A liquidation price is automatically created below its entry price. If the price drops and reaches the liquidation price, the position is sold and you lose your starting bet.
  • shorts: if an actor puts himself in shorts, he believes that the price will fall. A liquidation price is automatically created above its entry price. If the price rises and reaches the liquidation price, the position is bought. A short position liquidation triggers a purchase, which makes it possible to raise prices.

When a lot of players bet on the downside or up with leverage, there is creation of liquidity zones. Remember, this liquidity is directly created when opening a position, whether in shorts or long. The market likes to move towards this liquidity. In this way, large portfolios can open positions easily. This is why the market often moves in the opposite direction of the majority.

July 2021: short squeeze, Bitcoin explodes on the rise

Remember, at the end of July 2021, the price of Bitcoin was just below $30,000… and only nine days later at $42,000.

What happened?

There was what is called a squeeze short. This is a bullish, powerful movement that liquidates a lot of short positions and drives up prices. A liquidated shorts is a triggered purchase.

There is a way to know the number of long and short positions. This tool is calledOpen Interest. This tool simply measures the openings and closings of positions in these derivative contracts. When it rises, positions are opened and when it decreases, positions are closed.

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The funding rate is a different tool that makes it possible to identify whether the actors are mainly in long or shorts. A commission is paid by the actors when opening positions. When the funding rate is negative, the sellers (shorts) pay these fees to the buyers (long), and vice versa. Here’s a summary of what to remember about these two tools:

Table of possible deductions for two indicators: Open Interest (OI) and Funding Rate.

We will study here the perpetual contract of Binance during the short squeeze of July 2021:

Bitcoin and Open Interest chart during the short squeeze in July 2021

The Short Squeeze of July 2021 can therefore be described in two stages:

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  • Open Interest rises and exceeds the (green) resistance, while the price of Bitcoin falls. This means that players open a lot of positions while the price falls. The market liquidates very few (long) buyers because the open interest continues to rise.
  • The price rebounded from $30,000 to $42,000 in nine days. At the same time, open interest is falling sharply. Actors in shorts are liquidated. Open interest finds a (green) support on which it will then bounce.

Today, we know that it was a squeeze short because the price bounced off the support at $ 30,000 and the open interest fell sharply to around $ 42,000. That said, we must keep in mind that open interest only shows the opening and closing of positions. We could not know, with this tool alone, if it was mostly long or short.

At that time, the funding rate was negative during the entire drop in the price of Bitcoin from May to the end of July. This tool went in the direction of a high probability of short squeeze.

New squeeze shorts coming for Bitcoin?

Let’s study the current situation on the Binance perpetual contract on Bitcoin:

Bitcoin and open interest chart at the beginning of 2022

The price drops since the local top found on November 10, 2021. However, at the beginning of December, open interest began to rise sharply. It is on higher again. Clearly, there have never been so many open positions on this contract. Therefore, we find ourselves in a similar situation to July 2021. This can mean two things:

  • The players are mostly in long and continue to open positions in long, despite the fact that the price is falling. The liquidation price to lower the open interest is below $40,000. In this case, a huge downward movement is to be considered.
  • The players are mostly in shorts and continue to open positions believing that the price will continue to fall. In this case, to bring down the open interest, it will be necessary that the price of Bitcoin increases sharply.

During the short squeeze of July 2021, we had a negative funding rate which suggested that there were many short positions open on the market. Here, the funding rate is neutral and has been starting to be negative for a few days. It is more difficult to draw conclusions.

There is no certainty that a short squeeze will arrive again in a few weeks or months. Moreover, there is never any certainty in the financial markets in general. We find ourselves in a situation that resembles the end of July 2021, but what happened at the time will naturally not necessarily happen again. Open interest has never been higher on Binance’s bitcoin perpetual contract. One thing is for sure, there is going to be volatility in the coming weeks.

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Is it possible to be gagnant every time? Whether cryptocurrency prices are in great shape, or going through turbulence, Coin Trading offers you to increase your chances of success. Indeed Coin Trading allows individuals to access an algorithmic and 100% automated trading tool. A real trend mechanism, this tool has been designed to adapt to market reversals and position itself on the most dynamic crypto assets of the moment.

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Crypto

How to Create Account in EXMO step by step

In this article you will learn how to register in EXMO in 2022, as you well know it is a cryptocurrency platform to trade, as well as buy and sell digital currencies. Next, we are going to make you a quick and easy guide to create your account.

How to open an account in Exmo.com step by step

Access the official website of EXMO to be able to register for free.

Select “Registration”

At the top right you will have a Registration button, click on it and there you will open a form to place basic data such as username, email, telephone, password and its confirmation, as well as the acceptance of terms and conditions of the platform.

Likewise, if you want you can subscribe to receive news you just have to activate the option. then activate the captcha and click on “Registration”

Phone and email verification

They will send you an SMS to the registered phone to place the verification code and give it confirmation. The same will happen with the email, in which they will send you an email with a link to confirm the account and activate it.

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Account Verification

Once you have completed all the registration, you must verify your account, this is quite important that you do it so that you do not have limitations, it is a financial platform and as such, by regulation you must verify your identity and address.

  • For identity, you can do it through your ID, passport or other identity document, also a selfie with the document, you can support yourself by linking the mobile if you do not have a webcam.
  • In the case of the address, it would be verified with a bill for services such as electricity, water or other document where they can verify your location or residence, this is to raise the limits further.
  • For the card, you need to enter your card details and even take a photo and attach it.

Ideally, you should verify everything, but the first thing is the identity, in which you will be required name, surname, middle name in the case you have. Secondly, you will be asked to identify what type of document you are going to use to identify yourself, for example, the DNI.

After that, you must upload a photo of the front and back of the identity document, if you do not have them at hand, you can do it with your mobile and send it to you by mail or web whapsapp or another application, and then upload it from the computer.

Once this is done, it will request a selfie with specific details, where you must write down on a paper the word EXMO, followed by the date of the day of the photo and hold the DNI without covering anything, there you capture the photo and attach it, with these steps you will already be in the process of verifying the identity.

Likewise, you can do it to verify the address with a receipt and in the case of the card you must do the same, they are similar processes quite simple, the idea is that you complete the entire registration process.

Configuration

Another important point regarding registration is the security configuration in which you can add extra protection and have two-step authentication. Likewise, you can observe other options such as personal information, which you can review carefully.

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Crypto

How to create an account on Poloniex step by step

In this article you will learn how to register with Poloniex in 2022, it is a cryptocurrency trading platform, where you can trade with margin or leverage and you can also do hodl. Here’s a step-by-step way to create an account on Poloniex.

Go to the official website of Poloniex

Access the Poloniex registration page to later follow the step by step that we will give you to register for free.

Select “Sing Up”

Once you are on the platform you must select in the left menu “Sing Up”, where you must enter the email and password, the latter you must confirm it. Additionally, you must place the referral code (optional), as well as accept the terms and policies that govern this page.

Verify your email

Once the previous form has been completed, you must check the email where a link will be sent for the purposes of verifying the email, in order to continue with the account registration process.

Account access

With the email and password data entered, we select “Log In” and access. Among the important things that there are is the “profile”, where you will have to verify your account.

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If you want to apply margin for trading or leverage you must verify your profile in “Upgrade” you will be able to select other aspects that will help you verify your identity, you will probably be asked to upload a file, such as a photo of the DNI or an invoice to verify the address.

Then, in the event that you want to use the future option that allows margin up to one hundred leverage, you have to have verified these things.

This request is totally normal, since it is required by all financial platforms by legal issue, with this you would already have verified level 2 and with it you would not have any type of limit.

Right now, you could make all kinds of deposits, normal purchases with certain fairly high limits.

Two-factor authentication verification

To protect your account you can activate 2FA this is double authentication code, so you must enter a code apart from the password to be able to log in.

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Crypto

How to Invest in Cryptocurrencies on Skrill

If you are one of those investors who do not like to deal with many complicated orders, but prefer to hold long-term, then Skrill is an excellent alternative for you. With the simplicity that characterizes it.

But the question is, how to invest in cryptocurrencies within Skrill? The answer will be shown in this article.

But first log in to your Skrill account, then you could already start the step by step that will be shown below.

Access Skrill’s Cryptocurrency Investment Options

Like any financial platform, Skrill puts at your disposal tools so that you can invest in cryptocurrencies within yourself, doing so in a simple and comfortable way. To access these tools, below, we will describe the following procedure:

  1. Within the home screen of your account, in the left sidebar, find and tap on Cryptocurrencies.

Important: It is likely that when you enter this section, you will be asked to accept some terms or similar.

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  1. Once there, you are presented with different options in terms of cryptocurrencies. From among these, you will select Invest now, clicking on this option.

  1. Once you access that section, you will be shown an extensive list of existing cryptos in Skrill. In each of which, you are given a Trade option. If you click on any of these, you would enter their trading options.

  1. When you have entered the crypto you chose, you will see a Buy – Sell panel.

Ways to trade cryptocurrencies in Skrill.com

In this buy-sell panel or trading box, you will have some options that will allow you to perform these operations:

Steps to buy cryptocurrencies within Skrill

First of all, talking about the purchase of cryptocurrencies in the Instant mode (which is the usual one), you will be able to do the following:

  • Select the currency in which you want to buy cryptos.

  • Set the amount to spend that, for its purposes, must be a minimum of 10 EUR (You are also shown the balance you have available).

  • Select the cryptocurrency in which you are going to invest.

  • See what you are going to receive in cryptos in equivalence for what you have invested.

  • See the commission you will be charged for that transaction.

When you have everything ready, then you can click Next.

After this, you will be able to see the summary of the entire operation; you will be told everything you have added, such as the amount and what you would receive, and also the commission charge, which will be added to the total amount to be spent. If you agree with everything, you can click on Confirm.

Steps to Sell Cryptocurrencies within Skrill

There is not much to comment on in the case of selling your cryptos within Skrill, as they are basically the same steps as in the case of the purchase:

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  • You establish the type of crypto that you are going to sell (and that logically, you should own).

  • You indicate the amount of cryptocurrencies to sell directly or, if you prefer, using the percentage indicators.

  • Select the currency in which you want to receive the funds in equivalence.

  • See how much you will receive, in the same way as the previous case.

Having this ready too, you would click Next.

Following this, you must also click on Confirm in a summary similar to that of the case of the purchase, where you will see important data with which, if you agree, you can proceed to the respective confirmation.

Some other options that Skrill gives you to trade

The options you have in Skrill to trade are very practical and easy to use. And for your convenience, they are not numerous. Here’s what you can find on Skrill for when you want to trade on it:

The Portfolio section

In this section you have at hand some useful things for your negotiations, such as:

  • The Watchlist, with which you can keep abreast of the indices of your cryptos in the market.

  • Alerts and orders. With these options you are given the possibility to mark an index within the cryptocurrency, which, if the price reaches it, this will be notified to your email or mobile, as you have it configured.

  • Recent activity. It is the section where you will get your last financial movements, when it comes to purchases and sales, as is logical.

The Trade section

Within this section, you can do what you are told below:

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  • Visualization of Graphs. This will allow you to take a look at the stock market movement in a not at all complex interface (you can also see the current trend that the market has in terms of sellers and buyers).

As you can see, the trading system within Skrill is not complicated. They are few and simple options, but with the same utility for people like you who do not want to get too entangled in the stock market issue, but to play it safe, but in a simple way.

This tutorial summarizes it this way so that you have a general idea when investing in cryptocurrencies within Skrill.

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