Bitcoin price rally or short squeeze: $93.5 million in BTC shorts closed on Bitfinex

Bitcoin experts are debating whether the recent moves in the largest asset by market capitalization are indicative of a rally or a short squeeze. A short squeeze occurs when an asset that has been in an extended downtrend sees its price suddenly rise rapidly and short sellers decide to cut their losses and exit their positions. The increase in BTC price during a short squeeze can last from weeks to a few months, depending on other factors influencing the asset. 

Analysts remain bullish on a recovery in BTC price in 2023, bulls continue their hunt for a breakout in Bitcoin. 

Also read: Bitcoin and Ethereum to battle rising liquidity pressures in 2023, here’s what to expect

Bitcoin shorts worth $93.5 million were liquidated in December, BTC price rally incoming?

Bitcoin shorts worth $93.5 million were closed in December 2022 on cryptocurrency exchange platform, Bitfinex. A massive volume of closed shorts imply traders were bearish on the asset and decided to cut losses once BTC price climbed higher. Interestingly, this also signals uncertainty in the direction of Bitcoin price. 

Bitcoin shorts liquidated in December 2022 on Bitfinex

In the second half of 2022, BTC went through several phases of low volatility and lateral price movement. Volatility eventually returned and experts predict the same for Q1 2023. Bitcoin maximalists, investors and traders who believe BTC is the most superior cryptocurrency available and the one that is here to stay for the long haul argue that a price rally is imminent. 

On the contrary, technical experts in The Trading Capital, an online trading community, believe that the pump in BTC is just a short squeeze triggered by the liquidation of late shorts. But the bullishness needs confirmation through a spike in trade volume and a positive trend in macroeconomic outlook. Analysts argue that the overall sentiment among BTC traders is bearish and recommend waiting for a confirmation before opening a long position in the asset. 

BTC total liquidations

Based on the above chart from Coinglass, $9.12 million in shorts and $2.02 million in long positions were liquidated as of Jan 2. 

Bitcoin price predictions for 2023: $30,000 to $250,000, bullish outlook on BTC

Bitcoin price predictions range from $30,000 to $250,000 among experts and analysts. Tim Draper, an American venture capital investor, maintained an optimistic stance on BTC and predicted a run up to $250,000 by the end of 2023. Draper’s target implies a 1,400% rally in the largest cryptocurrency. 

Carol Alexander, Professor of Finance and Chair of Risk Management at the ISMA Centre argues Bitcoin is primed for gains and argues that the FTX contagion could catalyze a “managed bull market.” Alexander believes BTC could hit $50,000 in 2023.

Alistair Milne, a British entrepreneur and investor set a $45,000 target for the largest cryptocurrency by market capitalization. Milne believes BTC price should reach $150,000 to $300,000 by the end of 2024, arguing that “this is no time to be bearish and is likely a peak opportunity for the bulls.”

Swedish researcher and founder of Simp DAO Eric Wall believes BTC could pump above $30,000 at some point in 2023, without an exact timeline. Wall argues that $15,400 was the bottom for the virtual asset.