Nearly $ 150 million in short positions was wound up in a matter of hours as the price of Bitcoin (BTC) rose from $ 47,000 to over $ 53,000 on Monday.
The cryptocurrency market as a whole has experienced a strong squeeze as cryptocurrencies (ETH), Binance Coin (BNB) and other large cryptocurrencies have also increased by about 15% during the same period.
After Bitcoin accumulated 12% in one day, the futures market is completely reset and financing rates hover at neutral levels.
Why Bitcoin’s short squeeze is bullish today
The pressure from short trading indicates that short orders in the futures market are settled at short notice.
When short positions are wound up, card sellers are forced to buy back their positions, which increases the buying demand in the market.
Therefore, the number of short positions decreases rapidly and long contracts or purchase orders begin to dominate the market.
As the number of long trades increases dramatically, the size of Bitcoin financing increases. This is due to an increase in the financing rate when there are several long orders in the market.
If the financing rate is above 0%, buyers must pay the card sellers a portion of the positions every eight hours to the sellers, and vice versa.
In the case of Bitcoin, the last 24 hours, despite a strong rally in BTC, the level of funding has remained relatively low.
In fact, according to Bybt.com, the funding rate of major bitcoin exchanges is less than 0.01%, which is below neutral.
Bitcoin futures financing rate. Source: Bybt.com
This means that there are still more short positions in the bitcoin futures market than long positions, which could lead to further gains.
This trend is optimistic for Bitcoin when it emerges after the massive termination of short contracts. Lex Moskovsky, Chief Investment Officer at Moscow Capital, said:
“Short bitcoin deals worth around $ 150 million have been terminated as a result of this short increase. Nothing smells like fried bears in the morning. ”
Remove bitcoin overdraft. Source: Glassnode
Traders believe that Bitcoin can target growth in the short term
In the short term, traders say that the price level of $ 55,500 is important and must be taken again to get the chance to reach an all-time high.
4-hour BTC / USDT price chart (Binance). Source: TradingView, Johnny
Johnny, a cryptocurrency trader, said:
“The waterfall has been outlined, and now we have a very strong rebound. We have not yet come out of the forest. Give back $ 55,500 and we can talk about the new ATH. Until then, play the level. While the reaction is strong. … ”
Adnan Van Dahl, a former institutional trader, confirmed that if Bitcoin does not weaken before the US market opens, the likelihood of a further trend will increase.
If BTC comes to the US Open (in euros in the morning), I think the gums will be good for a while. Permanent product orders are open, fact sheets were good, SPX near ATH was useful on Friday and the company went live. – Parallel doubling of SPX / $ BTC this year. Wildcard TSLA l8r tho “.
As long as bitcoin stays above $ 51,000 on its way into the US open market and aims to increase above $ 55,000, the chances of reaching a full-time high in the foreseeable future will remain high.