– After bitcoin (BTC) crossed the $50,000 mark, bullish sentiment prevails in the cryptocurrency market. This high level of greed encourages traders to hold large long positions, which can lead to a long squeeze.
Essentially, a long squeeze is the opposite of a short squeeze, where long positions are liquidated sequentially. When traders open long positions, a pool of liquidity is created in the downside that whales and market makers can target.
When prices suddenly fall and these pools of liquidity are reached, bullish traders are liquidated and forced to sell, causing prices to fall further. For this reason, experienced investors usually argue that one should trade against the prevailing sentiment.
Notably, Finbold received data from CoinGlass on February 13 and found a meaningful threat of a long squeeze the following day.