Sunday, May 26, 2024

Bitcoin has recovered to $42K, as bets on a’short squeeze’ higher for BTC have begun to rise

Data from Cointelegraph Markets Pro and from TradingView was tracking the movement of BTC/USD. BTC/USD was seen to be recovering. On Monday, for the first time since September 2021 it had for the first time, broken the $40,000 mark – it had dipped to $39,600.

The expectations of a ‘short squeeze’ were rising and on Jan 11 BTC rose to exceed $42,000. On that day, none of the analysts were giving bullish prognoses. However, everyone was watching if the derivatives market would trigger a ‘short squeeze’.

The interest levels were high. Notwithstanding the downturn, the popular sentiment was in favor of a downturn. Under such circumstances, an unexpected uptick would cause a squeeze of the short positions. If this were to happen, it would bring some much-needed respite for the bulls.

Short Squeeze Forecasts

Glassnode, the analytics firm which publishes a weekly newsletter highlighted that such an occurrence was overdue. In Nov 2021, BTC witnessed a high of $69,000. But since then the longs have only seen suffering. Moreover, the squeezes occur whenever the market is not expecting a certain outcome.

Researchers expect some punishment for short traders. Researcher feel that they have been taking on considerable risk and may face a squeeze soon.

Glassnode added that spot BTC is not garnering much interest. The same is true for futures open interest leverage when it is nearing 2% of BTC’s market cap. These factors could also amplify the chances of a squeeze. An imminent short-squeeze is a likely resolution for the market.

Meanwhile, there were talks also around the possibility of the high open interest being erased by another fall towards $30,000. On Twitter, Crdible Crypto tweeted that an unexpected rise might be the event that will reset market competition. This is not unprecedented – it had happened in Aug 2021

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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