On June 18, within minutes, the bitcoin price climbed from $9,300 to over $10,500 across major crypto exchanges, triggering the entire market to recover swiftly. Analysts have generally attributed the abrupt surge in the bitcoin price to the occurrence of a short squeeze on…
On June 18, within minutes, the bitcoin price climbed from $9,300 to over $10,500 across major crypto exchanges, triggering the entire market to recover swiftly.
Analysts have generally attributed the abrupt surge in the bitcoin price to the occurrence of a short squeeze on margin trading platforms like BitMEX.
On margin trading platforms, a short squeeze occurs when a large buy order triggers many short contracts to become liquidated, pushing the bitcoin price up temporarily.
According to Alex Krüger, a global markets analyst, bears or sellers were in control of the bitcoin market throughout the past several days until the short squeeze happened, which was difficult to anticipate with conventional technical analysis.
“Bitcoin just moved by more than nine percent in four minutes. That’s how trends die. Bears were in control despite yesterday’s relief rally. Until now. All those who sold yesterday’s pullback got run over. No technical analysis could have predicted that squeeze until it was already halfway underway. Bears were fully in control until slightly past 10:30 EST,” he said.
Prior to the recovery, several technical analysts anticipated the bitcoin price to rebound from its pullback earlier this week.
One technical analyst said that while $8,000 remains a viable short-term target for bitcoin, a spike to $10,400 is a likelihood. The analyst wrote on July 18:
“IMO there is still a good chance BTC will see the $8000s; I’m just watching how high the bounce goes from here. 10.4 would be ideal.”
Following the recovery, the analyst noted that if bitcoin remains above an important support level in $10,850, it could sustain its momentum throughout the near term.
If it falls below it, however, he indicated that the short-term trend of the asset may struggle to turn bullish once again.
“10.4 met. No violent reaction, no rejection – BTC looking decent. Let’s see reaction at this next resistance. Punch and close above $10850 and things start looking substantially bullish,” the analyst said.
In the upcoming weeks, bitcoin and the rest of the crypto market are expected to move primarily based on technical factors rather than fundamental, possibly due to the stance of the Trump administration towards the crypto sector.
In an interview with CNBC this week, U.S. Treasury Secretary Steve Mnuchin warned investors against strong regulation, stating that the government will crack down hard on money laundering.
“We’re going to make sure that bitcoin doesn’t become the equivalent of Swiss-numbered bank accounts, which were obviously a risk to the financial system. I don’t think that’s accurate at all, that cash is laundered all the time. We combat bad actors in the U.S. dollar every day to protect the U.S. financial system,” he said.
Although industry executives have acknowledged the remarks of U.S. President Donald Trump and Treasury Secretary Steve Mnuchin as optimistic indicators of the long-term survivability of bitcoin, increasing efforts to strengthen regulatory oversight may create a difficult environment for companies.
Bitcoin still remains down by more than 30 percent from its yearly peak at around $14,000, and until it surpasses major resistance levels above the $11,000 level, technical analysts are likely to remain cautious on the short-term trend of the asset.
Last modified: January 10, 2020 2:17 PM UTC