If you look at the recent trading activity of Bitcoin on March 13th, 2021, the price spiked over 2000 points in a minute or two. Many people have asked me why this happens. It's due to a short squeeze.
When shorts build around a certain price and Bitcoin passes through that level it automatically causes the market makers to cover the shorts (buy Bitcoin). When this happens the price of Bitcoin spikes upward until all the shorts are covered.
I can't think of many things more risky than shorting Bitcoin: maybe going 100x levered long Bitcoin. Just like we see the price spike randomly, the price does drop randomly and then recover equally as fast. How does that happen?
With on chain data, whales can see weak levered long positions build. That is, people speculating the price of Bitcoin will go up with leverage. Today, up to 100x leverage is available on some exchanges. Small price changes with 100x leverage can see immediate liquidations. Whales can force liquidations (selling), and a fast price drop, by quickly selling a large block of Bitcoin. This causes a quick drop in price, which then forces a liquidation of levered longs. This creates a snowball effect, and liquidates all the weak hands driving the price down. When the liquidations stop, the whale who started the sell off is there to buy back at the lower price. All the weak hands are blown out and the price immediately runs back up.
The whale trader effectively picks the pocket of the levered retail investor. It is so obvious and stupid. The retail traders looking to get rich quick on 100x leverage deserve to get #rekt. Moral of the story is to buy Bitcoin and #HODL until the United States prints the USD until oblivion. Bitcoin will be worth millions at that point.