Bitcoin (BTC) has recently experienced a significant price movement, reaching the resistance level of $72,000 within its 3-month price range before pulling back to $67,000. This sudden shift has brought about uncertainties in the derivatives market, with a current trend towards short sellers in Bitcoin, possibly indicating an upcoming short squeeze.
The BTC price chart has shown that since the end of February, Bitcoin has been trading between $60,000 and $72,000. In the event of potential breakouts, the price could either surge to the all-time high of $73,805 or drop to $56,537.
On May 21, 2024, Bitcoin came close to reaching the $72,000 mark again but encountered resistance from short sellers, resulting in a change in the price formation. Consequently, BTC remained within the established range and experienced a 6.4% decline, settling at $67,315.
The accumulation of liquidity in Bitcoin futures and leveraged trading has the potential to target short sellers. These liquidity pools can also attract cautious investors, leading to a potential short squeeze in the near future.
CoinGlass data provides valuable insights into the current state of the derivatives market. Notably, there has been over $1.2 billion in liquidation at the $72,000 resistance level. Market makers and traders may see this as an opportunity for cash flow, which could trigger the liquidation of short positions and create an artificial demand environment. This increased demand could drive Bitcoin’s price above its all-time high, resulting in a short squeeze. However, it is important to note that if traders close their short positions, the significant liquidation levels could diminish.
Renowned crypto analyst Ali Martinez has examined the potential for a short squeeze and has highlighted the rise in whale activities. These whales have purchased 20,000 BTC, amounting to $1.34 billion, during this period. Despite the recent price movement, BTC is currently trading at $68,900, representing a 2.42% increase in the last 24 hours.
Please note that the information provided in this article should not be considered as investment advice. Investors should be aware of the high volatility and associated risks of cryptocurrencies and conduct their own research. Follow our news on Telegram, Facebook, Twitter, and Coinmarketcap.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
