Bitcoin (BTC) has recently experienced a surge in its price, reaching the resistance level of $72,000. However, it quickly retreated to $67,000, causing uncertainties in the derivatives market. This movement has led to a shift towards short sellers in Bitcoin, which could potentially result in a short squeeze.
The BTC price has been trading between $60,000 and $72,000 since the end of February. If there are any potential breakouts, the price could either reach its all-time high of $73,805 or drop to $56,537.
On May 21, 2024, Bitcoin almost reached $72,000 once again, but due to the presence of short sellers, the situation changed. As a result, BTC remained within the range and experienced a 6.4% decline to $67,315.
As Bitcoin futures and leveraged trading gain more liquidity, these activities could target short sellers. However, cautious investors might also view these liquidity pools as potential targets. Consequently, there is a possibility of a short-term short squeeze for BTC in the coming days.
Data from CoinGlass also provides 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 could exploit this situation as a cash flow opportunity. This could lead to the liquidation of short positions, creating an artificial demand environment. As a result, Bitcoin’s price could surpass its all-time high, triggering a short squeeze.
It is important to note that crypto investors assess their positions based on market changes. If traders close their short positions, the significant liquidation levels might disappear.
Renowned crypto analyst Ali Martinez has examined the potential for a short squeeze and highlighted the increase in whale activities. During this period, these whales purchased 20,000 BTC, equivalent to $1.34 billion, causing the price to drop to $67,000.
At the time of writing, BTC is trading at $68,900, reflecting a 2.42% increase in the last 24 hours.
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Disclaimer: The information provided in this article does not constitute investment advice. Investors should be aware of the high volatility and risk associated with cryptocurrencies and should conduct their own research.
