Bitcoin Price Just Surged 4% in Minutes Really Because of Bitfinex Maintenance

Tony "The Bull" Severino

5 years ago

3 mins read

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Bitcoin price just spiked as much as 4% in a matter of just a few minutes, as the market attempts to short-squeeze traders on the margin trading cryptocurrency exchange Bitfinex.

Bitfinex went down for maintenance today, just before the pump began. But why would platform downtime lead to such a move? Let’s look at what this means for Bitcoin price in the days ahead.

Bitcoin Price Spikes Following Bitfinex Maintenance

Bitcoin price has been explosive all throughout 2020 thus far, rising over 30% since the start of the year and reaching above the critical level of $10,000.

But after Bitcoin price reached above $10,000 this weekend, the leading crypto asset by market cap quickly fell back below the psychological FOMO trigger level.

Last night’s daily candle closed as a bearish engulfing candle, which typically signals that extreme bearish price action will soon follow.

However, the candle close may have been a fake-out move designed to trick traders into taking a short position, only for those shorts to be squeezed during today’s Bitfinex maintenance.

The idea is that traders expecting further downside would have opened short positions – positions they are currently unable to close with the platform being down for scheduled maintenance.

Soon after Bitfinex went down, Bitcoin price began to rocket upward, easily breaking back above $10,000 all the way to $10,400 before falling back to around $10,250 where it is currently trading.

https://twitter.com/awesome1273/status/1227265417711931397

Failed Short Squeeze Could Lead to Violent Long Squeeze

Traders on Bitfinex use leverage to gear their trades by a factor of up to 3.3x, which multiplies any profits or losses made from the position.

As the price climbs, shorts are either stopped out or traders close out their shorts to cover positions and ensure losses are kept to a minimum.

But as shorts are closed out, it acts as a buy order of Bitcoin, causing Bitcoin price to surge even higher and higher.

While a short squeeze is underway, fears over a potential long squeeze loom in the other direction. If bulls aren’t able to fully squeeze bearish traders out of their positions, a retaliatory move could result in a violent long squeeze in the days ahead.

Bitcoin back above $10,000, however, is very significant and if Bitcoin price can hold the key level, a bull market may be back on, and bears will finally be forced to switch sides and begin buying each new dip during the bull run.

Featured image from Shutterstock

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.