Bitcoin Faces Retail Panic Selling Amid Long Squeeze Fears

In early November, Bitcoin (BTC) dipped below the crucial psychological threshold of $100,000, hitting a low of approximately $98,900 before managing to reclaim its six-figure status. This price movement indicates a prevailing bearish sentiment among investors. However, a recent on-chain analysis points to a potential significant price reversal for Bitcoin in the near future.

Surge in STH Activity on Binance Sparks Liquidation Events

On November 3rd and 5th, Bitcoin's retail trading activity surged on the Binance platform, according to a QuickTake analysis by on-chain analyst Amr Taha. His report highlights the 'Bitcoin LTH/STH Buy/Sell Binance' metric, which tracks the buying and selling habits on Binance while distinguishing between Long-Term Holders (LTHs) and Short-Term Holders (STHs).

Taha notes that there was a remarkable uptick in STH selling on Binance, particularly from a group referred to as "clown wallets." On November 3rd, 251 BTC were deposited into Binance, and this figure escalated to approximately 517 BTC on November 5th.

This pattern of panic selling among STHs typically serves as liquidity for long-term holders who capitalize on the fear-driven market to accumulate more Bitcoin.

Additionally, Taha discusses findings from the BTC: Binance Liquidation Delta metric, which measures the disparity between long and short liquidations on Binance. This metric reveals whether more long or short positions are being forcibly closed.

Recent data suggests that the majority of liquidations have involved long positions that were entered late in the Bitcoin cycle and with excessive leverage. These long positions were forced to close between the price range of $107,000 and $100,500, leading to what is termed a long squeeze. A long squeeze occurs when a wave of selling is triggered after traders with over-leveraged long positions are compelled to exit their trades.

While long squeezes typically result in rapid price declines, they do not pose a significant threat to long-term investors. Historically, Bitcoin's long-term holders have viewed these events as opportunities for accumulation, effectively acting as a buffer against the steep price drops the cryptocurrency may experience. If historical trends hold true, Bitcoin could soon hit a price bottom, paving the way for accumulation and potential price growth.

Current BTC Price Snapshot

As of this writing, Bitcoin is valued at approximately $103,500. The cryptocurrency has experienced a 24-hour increase of over 2%, according to data sourced from CoinMarketCap.