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Today, the ratio of Bitcoin shorts to longs has hit 1.4, which is the highest ratio so far this year. Last time the ratio breached 1.2, back in April of this year, there was a short squeeze which moved the BTC price up $1000 within an hour.

Short Squeeze on the Horizon?

Alistair Milne, CIO of Altana Digital Currency Fund, brought this to the attention of his Twitter followers earlier today:

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A short squeeze arises when the price of an asset with a large number of short positions moves higher quickly. This upward price movement forces the liquidation, or closing, of some of these short positions, which in turn, drives the price higher still. This creates a cascading effect where the higher the price goes, the more shorts that are “squeezed.”

Traders Take Note

Other traders have been observing this short vs. long disparity, with some expecting that upwards price volatility for Bitcoin is imminent.

CNBC Cryptotrader host, Ran NeuNer, was also quick to point out the high of short positions, noting too that the Cboe futures close today, which often close prior to upwards price momentum:

Bitcoin has been through a particularly rocky period since the Cboe ETF decision was postponed earlier this month. Many traders and investors will be hoping for a relief rally, and the potential incoming short squeeze could provide just that.

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