In early November, Bitcoin (BTC) went so far as to slip below its psychological support of $100,000, reaching around $98,900 before regaining its six-figure valuation. While this may indicate the dominance of a bearish sentiment among its investors, a recent evaluation of the chain has surfaced, which explains why the Bitcoin price may soon experience a major reversal.
Binance Sees Increased STH Activity; Triggers liquidation cascade
In a recent QuickTake posts at CryptoQuant, on-chain analyst Amr Taha reveals a sudden change in Bitcoin retail activity on the Binance network. Taha’s report dwells on the ‘(Bitcoin) LTH/STH Buy/Sell Binance’ metric, which tracks buying and selling activity on Binance, distinguishing between long-term holders (LTH) and short-term holders (STH).
Taha points out that on November 3rd and 5th, Binance recorded a significant increase in selling activity for Bitcoins STH, especially from holders known as “clown wallets”. About 251 BTC flowed into Binance on November 3rd, while an even larger amount of BTC, about 517, was sent to Binance on the 5th of this month.
Because of these STHs’ common propensity to panic, their positions often serve as liquidity for the cryptocurrency’s long-term holders who take the chance to accumulate amid a fear-driven retail market.
On another note, the analyst highlights results from BTC: Binance Liquidation Delta, a metric that measures the difference between long and short liquidations on Binance, thereby revealing whether more long or short positions are being forcefully closed.
According to Taha, most of the recent liquidations appear to be long positions that were entered both late in the Bitcoin cycle and highly leveraged. These positions were forcefully closed in the $107,000-$100,500 range, triggering what is commonly referred to as a long squeeze. For context, a long squeeze is a series of selling that follows traders with long positions that have survived being threatened or wiped out.
Although a long squeeze usually causes the price to drop quickly, it does not pose a significant problem for a cryptocurrency’s long-term investors. As a result, Bitcoin’s long-term holders have historically viewed these events as accumulation opportunities, thus standing as a soft cushion against the sharp nosedive the cryptocurrency’s price may see. If historical trends were to recur, BTC may soon reach its price bottom, after which an accumulation and eventual price expansion may occur.
BTC Price Overview
At the time of writing, Bitcoin has a valuation of around $103,500. The cryptocurrency has seen a 24-hour growth of more than 2%, per data from CoinMarketCap.
Featured image from Unsplash, chart from Tradingview.com
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