Why Bitcoin’s current trajectory is a worrying sign for bears

Journalist

Posted: February 14, 2024

• BTC surged past $50,000, causing losses for short sellers.
• Optimistic sentiment persisted, but rising Implied Volatility sparked caution.

Bitcoin’s [BTC] inspired massive optimism over the last few days as its price pushed past the $50,000 mark. However, short sellers weren’t too impressed by the sudden jump in BTC’s price, as they faced huge losses.

Bears feel the heat

Even though BTC, at the time of writing, was back at the $48,000 level, the threat of its price surging still loomed.

Recent data indicated that if Bitcoin reaches the $55,000 mark, approximately $800 million worth of short positions are poised to face liquidation.

If short positions close, buying activity from traders covering their positions can lead to a surge in demand for BTC.

This increased demand, coupled with the existing market dynamics, has the potential to push BTC’s price even higher.

🚨 ALERT 🚨

$800,000,000 WORTH OF SHORTS
WILL GET LIQUIDATED IF BTC HITS
$55,000. pic.twitter.com/FR2bkLbQ7c

— Ash Crypto (@Ashcryptoreal) February 12, 2024

However, at press time, most traders were optimistic about the state of BTC. This was indicated by the declining put-to-call ratio for BTC, which had fallen from 0.52 to 0.46 in the last few weeks.

Source: The Block

A spike in IV

Bitcoin’s Implied Volatility (IV) started to see an uptick recently, which could cause some problems for the king coin.

Implied Volatility is a measure of the market’s anticipation of potential price movements. Inasmuch, a rise in IV typically indicates an expected increase in market uncertainty.

Source: The Block

A spike in IV can cause traders to get more bearish about the future of BTC and may hinder the growth of the bullish sentiment around the king coin.

Holding on

Coming to the state of the holders, it was seen that the MVRV ratio had surged incrementally. This suggested that most BTC holders were profitable due to the sudden surge in BTC’s price.

However, this surge in profitability may incentivize many holders to sell their holdings for a profit, which could cause some negative pressure on BTC’s price.

The king coin’s Long/Short ratio had grown alongside the MVRV. This meant that many long-term holders were accumulating BTC, and these addresses outnumbered the short-term holders.

Long-term holders are unlikely to sell their holdings, and their consistent accumulation of BTC may help offset some selling pressure created by other addresses.

Read Bitcoin’s [BTC] Price Prediction 2024-25

Moreover, these addresses could help contribute to long-term growth for BTC in the future.

Source: Santiment

At press time, BTC was trading at $48,204.27 and its price had grown by 0.03% in the last 24 hours.