Bitcoin [BTC] has experienced a surge to $63K driven by bullish movements following a period of consolidation, influenced by decisions made by the Federal Reserve.
Macro factors, combined with movements in BTC derivative markets, have resulted in a $147M loss for cryptocurrency shorts due to a squeeze effect.
As Bitcoin nears the $64K mark, stakeholders are urged to devise strategies to surpass the critical resistance level of $70K, a challenging task that requires careful planning. Can Bitcoin make it? Let’s delve into the details.
Unlocking the Squeeze Phenomenon
Over the past 180 days since Bitcoin last reached its all-time high of $73K in March, bulls have attempted to breach the $71K level on four occasions, encountering strong resistance each time.
Analysis by CryptoCrypto suggests that Bitcoin must maintain its position at $64K to target the subsequent resistance level at $68K, which has been tested twice since June. Success at this level could pave the way for an approach towards $71K.
The recent spike in Open Interest (OI) has played a crucial role in the surge, compelling crypto shorts to close their positions and resulting in losses amounting to $147M.
A pattern similar to the one observed in late August, when Bitcoin approached $64K, is emerging, signaling a potential retest of that price mark.
However, a repeat scenario could hinder a breakout, with Bitcoin bears re-entering the market and obstructing any breakthrough attempts.
In essence, despite the recent rate cuts, Bitcoin still faces substantial hurdles in surpassing $64K before contemplating a broader surge. Could the losses incurred by crypto shorts be attributed to a “short” squeeze?
Assessing Stakeholders’ Profits
An evaluation of stakeholders’ responses to price variations shows that a considerable portion of buyers are currently in a profitable state, as indicated by the green segment in the chart.
Previous instances have illustrated that spikes in this ratio often align with market peaks. However, during the previous $64K peak, the rapid surge was short-lived as crypto shorts promptly capitalized on their profits.
Should this pattern repeat itself, a potential breakout might stall as traders exit prior to the rally’s decline, thereby reinforcing the short squeeze theory.
Furthermore, in the event of a resurgence in crypto shorts, bulls will need to capitalize on any opportunity that arises to propel Bitcoin towards $70K.
Potential BTC Retracement Scenario
During the recent three-day surge that saw Bitcoin surpass $60K, crypto shorts retreated, allowing a notable increase in long positions.
However, a minor downward trend could lead to significant liquidations if the bulls fail to sustain the current support levels. In the event of trader exits and dwindling bullish sentiment, a resurgence in crypto shorts could potentially drag Bitcoin back below $60K.
Historically, $64K has been a point of both resistance and support, with the likelihood of a breakout contingent on investors’ strategic moves. Failing to capitalize on the $147M squeeze generated by crypto shorts might see Bitcoin retract to $55K.