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
