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Breaking News: Dogecoin (DOGE) Soars 8%, But An Uptick In This Metric Suggests A Pullback
bitcoin price bitfinex short squeeze

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

Tony Spilotro by Tony Spilotro
3 years ago
in Cryptocurrency news, Bitcoin
Reading Time: 3 mins read
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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.

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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.

Related Reading | Crypto Fireworks Yet to Come As BitMEX Open Interest Remains Over $1 Billion 

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

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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.

thank you,i just lost all my money

— VaderPaul4 (@awesome1273) February 11, 2020

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.

Related Reading | Bitcoin is Setting Up For a Violent Long Squeeze, Which May Trigger New Lows 

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

Tags: bitcoinbitcoin pricebitfinexcrypto
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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