Bitcoin rally isn’t just a short squeeze, according to the founder and CEO of BitMEX, Arthur Hayes who believes Bitcoin is yet to bottom out before rising to its peak in the quarter 3 or 4.
Bitcoin rally, a short squeeze?
In an interview with the CNBC’s Fast Money, the founder and CEO of Bitcoin exchange, BitMEX, Arthur Hayes shared his views on the current Bitcoin rally being an effect of the short squeeze.
A short squeeze is basically a jump in the price of a stock that forces a large number of short sellers to close their position. This, in turn, pushes the price of stock even higher.
In the past few days, Bitcoin has been registering continuous gains rising above $7k level. This has resulted in the liquidation of $180 million worth of short positions to close in an hour.
It has been believed one of the reasons for the Bitcoin rally has been due to the dilution of positions on BitMEX.
In the interview, Hayes explained,
“During the pump from $6,800 to about $7,250, in that… 15 minutes, we liquidated about $230 million worth of short positions, but bear in mind that we are a futures market; so, for every long, there’s a short. So, there’s not an imbalance of shorts per se, but many people probably entered the position around the same levels, which is probably why we got a little pump there.”
Bitcoin yet to bottom out, before rising in Q3, Q4
On being asked if Bitcoin has seen the worst, Hayes shared,
“I don’t actually think we’ve seen the worst. I think this is a very strong reality on good volume, and we definitely could see $8,000, $9,000, and maybe just shy of $10,000. We’ve been here before earlier this spring: we rallied from $5,800 to in the high $9,000 level, but didn’t quite crack $10000. I think similar action will happen this time, and I would like to see us test $5,000 to really see if we put a bottom in.”
Last month, Bitcoin has dropped down below $6k level, so the current price rise is certainly a good news for the traders.
According to Hayes, people are having a chill time during the summer, “But come back in Q3, Q4, I think is when the party is going to start again.”
Recently, Hayes confirmed that he stands firm on his bitcoin price prediction. According to him, the current rally will close around $10,000 but won’t rise above it. It will fall and test the $5k, “If that holds then we can rally to $50,000 by year-end.”
At the time of writing, Bitcoin has been trading at $7,464 with a 24-hour rise of 1.24 percent. The world’s number 1 cryptocurrency’s market cap has reached $128 billion while managing the daily trading volume of $5 billion.
Do you think Bitcoin will test the bottom before surging high at the end of quarter 3?