A NEW study found that traders who bet against Bitcoin lost hundreds of millions of dollars last week.
The report issued by BitStacker revealed that $386.74 million in Bitcoin short positions was liquidated between 10 to 16 January 2023. This happened at exchanges such as Binance, OKX, Bybit, Huobi, Bitmex, Deribit, CoinEx, and Bitfinex.
The worst day for Bitcoin liquidations came on 14 January. That Saturday saw traders betting against Bitcoin losing $141.01 million and it built upon a growing trend for investors to lose when shorting the cryptocurrency over the previous four days.
The trend was reversed on Sunday, January 15 when the overall liquidated Bitcoin amount was just $6.86 million, although the figure started to rise again on Monday, January 16 where $30.95 million was lost by traders betting against the cryptocurrency.
The fact that traders lost close to $400 million in one week typifies the risks of the short-selling trading strategy. This is where a trader will bet that the value of an asset will fall.
Such a strategy is the direct opposite of the typical investment strategy where a trader would invest in an asset with the expectation that the asset’s value would rise over time. However, with Bitcoin enjoying a market cap rise of almost 25% in one week, it further emphasizes the risks of shorting cryptocurrencies.
Kris Lucas, BitStacker.com analyst said:
“While it’s always sad to see traders losing money on their investments, the study does show that cryptocurrencies might finally be bouncing back. 2022 was a very tough year for crypto coins with the collapse of several major exchanges as well as the Terra stablecoin. However, the fact that Bitcoin is starting to regain its value could suggest that the so-called ‘crypto winter could soon be over.”