There is a predominantly bullish mood in the cryptocurrency market after Bitcoin (BTC) surged past $50,000. This level of greed encourages traders to open massively long positions, which could soon lead to a long squeeze.
Essentially, a long squeeze is the opposite of a short squeeze, which occurs when long positions are liquidated one after another. When traders open long positions, downward pools of liquidity are created that can become targets for whales and market makers.
If the price suddenly drops and reaches these liquidity pools, bull traders will be liquidated and forced to sell their positions, causing the price to fall even further. This is why smart investors usually argue that we should trade against general sentiment.
Specifically, Finbold pulled data from CoinGlass on February 13th and identified significant long squeeze threats for the following days.
Long squeeze alert for Bitcoin (BTC) this week
Bitcoin in particular has accumulated huge pools of liquidity at lower prices due to its recent surge to $50,000. Each pool could become an attractive target if the price begins to decline, leading to long liquidations and a long squeeze.
Notably, the first level on the weekly time frame is just below $48,000. The loss of this support would be the trigger for such a liquidation event. The largest liquidity pools are at $46,600 and $44,600, with nearly $700 million awaiting a margin call.
Heatmap of one-week BTC liquidation on February 13th. Source: CoinGlass
However, there is still some remaining liquidity to the upside at $50,500, the current price resistance. This means BTC could see another brief rise into this zone before falling back to $44,000 in a long squeeze.
Solana (SOL) could crash below $100 this week
Solana (SOL) is another candidate for a retracement due to a recent increase in long positions. Ethereum's (ETH) leading competitor has outperformed most of the market since 2023, fueling the greed of crypto investors worldwide.
Still, the heatmap of Solana and other altcoins is not as busy as that of Bitcoin. Therefore, in a long squeeze, they must first let BTC crash before they can follow its lead.
SOL has liquidity pools at $107.40, $103.25, $100.70, and $96.40. All of these prices are potential targets in the event of a retracement this week.
SOL 1-week liquidation heatmap on February 13th. Source: CoinGlass
To summarize, Bitcoin and Solana are trading at $49,900 and $113.70, respectively, as of press time. Both cryptocurrencies could fall as low as $44,000 and $96 respectively if a long squeeze occurs under the right conditions.
Still, the crypto landscape is unpredictable and extremely volatile, so this scenario can change at any time. Positive news and developments could maintain the strength of these projects this week and lead to higher rather than lower prices. Investors must act cautiously and avoid excessive exposure in any direction.
Disclaimer: The content of this website should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.
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