The $371M worth of crypto shorts eradicated as Bitcoin breaches $76k: Will $80k be the next milestone?
The build-up to the election has ignited substantial liquidity in the options market, wiping out $371 million in crypto shorts and propelling Bitcoin [BTC] to a fresh all-time high of $76k.
Following a 25 basis points FOMC rate reduction, which has added close to 2% since the previous close, the market’s bullish momentum is unquestionable. This surge may drive BTC towards $78k, as individual investors flood in, influenced by the favorable sentiment towards Bitcoin.
Nonetheless, the stacking up of long liquidations indicated in the delta could potentially lead to a long squeeze before the weekend. Therefore, a minor pullback to shake off the FOMO-driven long positions presents a genuine risk.
In essence, those who leaped into the market hastily under the sway of hype may face exposure if the market sentiment abruptly turns negative.
Hence, devising a strategic plan at this critical juncture is imperative. Investors who rely on quick gains derived from speculation rather than solid foundational elements might encounter financial setbacks.
Increasing Volatility as the Derivative Market Adapts
The election fervor, combined with prominent endorsements, has set up the ideal circumstances for BTC to potentially achieve $80k by the conclusion of this month.
Traditionally, the post-election hype has triggered analogous responses. Nevertheless, over the last four years, the derivative market has undergone transformations, with the Open Interest (OI) hitting an unprecedented high of $45 billion.
As more speculative bets are placed, the upsurge is increasingly fueled by speculative positions, as evidenced by the elimination of $371M worth of crypto shorts.
In just the past three days, $26 billion in long positions were initiated as speculators bet on a probable bull rally, spurred by optimism surrounding Trump’s prospective win.
While this presents a bullish indication, the absence of robust buying interest might incite a long squeeze, thereby jeopardizing BTC’s outlook to hit the $80k objective.
Consequently, the focal point now should be on reevaluating the foundational aspects to discern how the market is responding to this evolving trend.
Could Crypto Shorts Become More Exposed?
A recent report from CryptoCrypto has unveiled that individual investors are capitalizing on BTC’s declining trend, steering it towards new peaks after hitting a market low. Conversely, institutional interest is on the rise, with BTC ETFs experiencing an inflow of $1.3 billion – the highest since its launch.
For the current $76k level to act as a robust foundation with the potential for a $100k upsurge, steady accumulation from both individual and institutional investors is vital. Without this support, a long squeeze could threaten the ongoing rally.
Conversely, with a solid backing, provoking more long positions to join in, crypto shorts could be increasingly at risk.
If the rally is sustained, a prolonged upward trajectory might persist, potentially propelling BTC above $80k. However, closely monitoring the derivative market at this juncture is more crucial than ever.