{"id":5363,"date":"2023-01-17T19:36:38","date_gmt":"2023-01-17T19:36:38","guid":{"rendered":"http:\/\/ci02b59b0ab00024c7"},"modified":"2025-01-28T14:29:48","modified_gmt":"2025-01-28T14:29:48","slug":"bitcoin-price-hits-21000-huge-short-squeeze","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/markets\/bitcoin-price-hits-21000-huge-short-squeeze","title":{"rendered":"Bitcoin Price Reaches $21,000, Shorts Demolished In Biggest Squeeze Since 2021"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><p><em>The below is an excerpt from a recent edition of Bitcoin Magazine PRO, Bitcoin Magazine&#8217;s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, <\/em><a href=\"https:\/\/bm.b.tc\/3Wlped5\" target=\"_blank\" rel=\"noopener\"><em>subscribe now<\/em><\/a><em>.<\/em><\/p>\n<p><iframe loading=\"lazy\" height=\"320\" width=\"480\" src=\"https:\/\/bmpro.substack.com\/embed\" frameborder=\"0\" scrolling=\"no\"><\/iframe><\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2025\/01\/screenshot-2022-12-06-at-104308-am.png\" title=\"\"><\/figure>\n<h2>Net Liquidity And Moving Averages<\/h2>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/some-models-useful.png\" title=\"\"><\/figure>\n<p>One of the most useful models in tracking the cyclical tops for both the S&amp;P 500 Index and bitcoin since March 2020 has proven to be net liquidity, an original model by <a href=\"https:\/\/twitter.com\/42MacroAlerts\" target=\"_blank\" rel=\"noopener\">42 Macro<\/a>. Net liquidity tracks the changes in Federal Reserve total assets, the U.S. Treasury general account balance and the reverse repo facility. A lower net liquidity translates to less capital available to deploy in markets. We find it useful as a key macro indicator to assess current liquidity conditions and how bitcoin trades in the market. <\/p>\n<p>Bitcoin has acted as a liquidity sponge throughout its life and contracting liquidity in all markets has had a significant impact on the bitcoin price and trajectory. Ultimately, that\u2019s one of the main drivers of our core long-term thesis that bitcoin\u2019s growth depends on an environment of perpetual monetary debasement and expanding liquidity to work against current levels of unsustainable sovereign debt and deflationary forces. In the short-term, it\u2019s not clear when overall liquidity will increase again en masse. That\u2019s the trillion dollar question and the topic of conversation on which everyone is speculating. Net liquidity provides a view into that trajectory as a measure that\u2019s updated weekly with fresh data.<\/p>\n<p>Bitcoin is seeing some of its largest relative strength since January 2021, but it also comes at a time when we\u2019re seeing a significant daily uptick in net liquidity after a period of historically low volatility. The uptick is driven by a much lower reverse repo balance since the start of the year. With the Fed\u2019s position of \u201chigher for longer,\u201d a projected view of Core CPI at 3.5% for 2023 and continued balance sheet runoff, we will likely see net liquidity decline \u2014 barring a spontaneous or emergency policy reversal.&nbsp;<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitcoin-and-net-liquidity.png\" title=\"\"><\/figure>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2025\/01\/bitcoin-magazine-pro-banner.jpg\" title=\"\"><\/figure>\n<p>Price has broken above the short-term holder realized price. That\u2019s happened only a few times in this bear market and these events were short-lived. As this price reflects the average on-chain cost basis of the more recent buyers, it will be key to see if these market participants are looking to sell here at cost or if they will stay to continue with the momentum.&nbsp;<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/short-term-holder-realized-bitcoin-price.png\" title=\"\"><\/figure>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitcoin-price-tests-200-day-moving-average.png\" title=\"\"><\/figure>\n<p>The 200-day moving average may seem somewhat arbitrary, but the mere fact that many technical traders and momentum- and trend-based investors monitor this level gives it significance. A clean break above could mean continued strength for bitcoin in the coming days and weeks ahead.&nbsp;<\/p>\n<p>The price action to start the new year has been quite the promising sign for bitcoin bulls. Similarly, over the last week, shorts as a percentage of futures liquidations has reached its highest level in the history of the data. While shorts have been decimated as of late, it\u2019s likely that this immediate upside could be capped.<\/p>\n<p>While there is a long way to go in terms of surpassing previous bull market heights, the year-to-date performance has been hopeful following a year where the industry practically imploded. <\/p>\n<p>Overall, this is a promising start to 2023. <\/p>\n<hr>\n<p><em>Like this content? <\/em><a href=\"https:\/\/bm.b.tc\/3Wlped5\" target=\"_blank\" rel=\"noopener\"><em>Subscribe now<\/em><\/a><em> to receive PRO articles directly in your inbox.<\/em><\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2025\/01\/bmpro-subscribe-button.png\" title=\"\"><\/figure>\n<h2>Relevant Articles:<\/h2>\n<ul>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/bitcoin-volatility-hits-historic-lows\" target=\"_blank\" rel=\"noopener\">Time-Based Capitulation: Bitcoin Volatility Hits Historic Lows Amid Market Apathy<\/a><\/li>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/what-to-expect-when-youre-expecting\" target=\"_blank\" rel=\"noopener\">What To Expect When You\u2019re Expecting Volatility<\/a><\/li>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/the-fuel-for-next-bull-run\" target=\"_blank\" rel=\"noopener\">The Fuel For Next Bull Run<\/a><\/li>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/bitcoin-short-sellers-get-squeezed\" target=\"_blank\" rel=\"noopener\">Bitcoin Short Sellers Get Squeezed<\/a><\/li>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/caution-bear-market-rallies\" target=\"_blank\" rel=\"noopener\">Caution: Bear Market Rallies<\/a><\/li>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/when-will-the-bear-market-end\" target=\"_blank\" rel=\"noopener\">When Will The Bear Market End<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Bulls take charge with massive upward momentum. Key price levels to watch to determine whether this is another bear market rally or a move with lasting power.<\/p>\n","protected":false},"author":2736,"featured_media":654,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[85,132,1376,131,1726,1725,1709,1679],"class_list":{"0":"post-5363","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-bitcoin-magazine-pro","9":"tag-bitcoin-price","10":"tag-liquidation","11":"tag-liquidity","12":"tag-moving-averages","13":"tag-short-squeeze","14":"tag-technical-analysis","15":"tag-volatility"},"author_data":{"id":2736,"name":"Dylan Leclair And Sam Rule","nicename":"dylan-leclair-and-sam-rule","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/2b6b26c44e1d269b6e0f99be25243a520901d88fba7899ea664ee1c543b3ff6d?s=96&d=robohash&r=g"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/green-candle-price.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/5363","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2736"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=5363"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/5363\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/654"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=5363"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=5363"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=5363"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}