Trusted editorial content reviewed by leading industry experts and experienced editors. Ad Disclosure
In early November, Bitcoin (BTC) even slipped below its psychological support of $100,000, reaching around $98,900 before regaining its six-figure value. Although this will likely indicate that bearish sentiment prevails amongst investors, an on-chain valuation has recently emerged that explains why Bitcoin price could soon see a major trend reversal.
Binance Sees Increased STH Activity; Triggers the liquidation cascade
In a recent QuickTake post on CryptoQuant, on-chain analyst Amr Taha reveals a sudden shift in Bitcoin retail activity on the Binance network. Taha’s report addresses the “[Bitcoin] “LTH/STH Buy/Sell Binance” metric that tracks buying and selling activity on Binance and distinguishes between long-term holders (LTHs) and short-term holders (STHs).
Taha notes that on November third and fifth, Binance saw a major increase in Bitcoin STH selling activity, particularly from holders often known as “clown wallets.” On November third, about 251 BTC flowed into Binance, while on the fifth of this month, a good larger amount of BTC, about 517, was sent to Binance.
Due to those STHs' usual tendency to panic, their positions often function liquidity for the cryptocurrency's long-term holders who seize the chance to build up amid a fear-driven retail market.
Source: CryptoQuant
On the opposite hand, the analyst highlights the outcomes of the BTC:Binance Liquidation Delta, a metric that measures the difference between long and short liquidations on Binance, thus showing whether more long or short positions are being forcibly closed.
According to Taha, a lot of the recent liquidations look like long positions that were entered into late within the Bitcoin cycle and have high leverage. These positions were forcibly closed within the $107,000 to $100,500 range, triggering a so-called long squeeze. For comparison, an extended squeeze is a series of selling that follows after traders with overly leveraged long positions are threatened or worn out.
Although an extended squeeze typically causes the worth to fall quickly, it doesn’t pose much of an issue for long-term investors in a cryptocurrency. As a result, long-term Bitcoin holders have historically seen these events as a chance for accumulation, thereby acting as a soft cushion against the sharp crash that the cryptocurrency's price could experience. If historical trends repeat, BTC could soon reach its price bottom, which may very well be followed by accumulation and possible price expansion.
BTC price overview
At the time of writing, Bitcoin is price roughly $103,500. According to data from CoinMarketCap, the cryptocurrency recorded growth of greater than 2% in 24 hours.
BTC is trading at $102,264 on the day by day chart | Source: BTCUSDT chart on Tradingview.com
Featured image from Unsplash, chart from Tradingview.com
Editorial process At Bitcoinist, the main target is on providing thoroughly researched, accurate, and unbiased content. We maintain strict sourcing standards and each page is rigorously reviewed by our team of top technology experts and experienced editors. This process ensures the integrity, relevance and value of our content to our readers.
