Bitcoin derivatives market signals an upcoming “short squeeze” that can lead to a sharp rally in Bitcoin price, with an end of selloff in the largest crypto asset. Moreover, analysts have turned overall bullish due to technical strength in the BTC chart and the latest macroeconomic data.
Bitcoin Price To Witness “Short Squeeze”
Crypto market is staging sharp recoveries as the funding rates on Bitcoin and many altcoins are still negative, indicating a big short squeeze ahead.
According to K33 Research data, the seven-day average annualized BTC perpetual funding rate was the lowest on Tuesday since March 2023 — when US bank failures spooked investors — indicating a prevalence of downside risks.
The report predicts a potential sell-side exhaustion, with a setup indicative of an imminent short squeeze coming soon. The chart illustrates a BTC open interest spike during negative perpetual funding rates.
“Perpetual swap funding rates have averaged at negative levels over the past week, while open interest has sharply increased,” K33 analysts Vetle Lunde and David Zimmerman wrote in a note. “This suggests aggressive shorting, structurally creating a setup ripe for a short squeeze.”
The sharp price jumps will force traders to close their short positions. The rise in short liquidation will fuel upside momentum in BTC price. This could change the overall crypto market direction, increasing the positive sentiment among investors.
Meanwhile, the global stock gauge rebounded to hit a record high while gold also set a new record hit. The US dollar index (DXY) and 10-year Treasury yield have hit yearly lows, triggering an uptrend in Bitcoin price.
Analysts Turned Bullish on BTC
Spot Bitcoin ETFs recording inflows for consecutive days and recovery in the Fear and Greed Index have fueled Bitcoin rally. However, the current US political landscape amid elections continues to impact BTC and other crypto. On Tuesday, Bitcoin ETFs saw $88 million in inflows, with BlackRock Bitcoin ETF recording $55.4 million.
Crypto analyst Rekt Capital expects BTC to enter post-halving reaccumulation phase if it closes above $60,600 this week. Bitcoin price is currently below $60,000 psychological level.
Veteran trader Peter Brandt said Bitcoin and Ether charts continue to drive interest. BTC weekly and daily graphs continue to form a megaphone or broadening triangle pattern. This indicates market volatility and uncertainty, but often signals an impending major price movement.
Bitcoin price could move towards its all-time high of 73,835, but he asserts there is no declaration of next trend yet. The recent $700 million BTC transfer by Mt. Gox and election dynamics continue to impact the market trend.
BTC price is rebounding to $60,000 after falling below $59,000. The price is currently trading at $59,648. Moreover, the trading volume has declined by 8% in the last 24 hours, indicating a decline in interest among traders. A recent BTC price analysis by CoinGape predicts when BTC could reach $70,000 again.
Varinder Singh
Varinder has 10 years of experience in the Fintech sector, with over 5 years dedicated to blockchain, crypto, and Web3 developments. Being a technology enthusiast and analytical thinker, he has shared his knowledge of disruptive technologies in over 5000+ news, articles, and papers. With CoinGape Media, Varinder believes in the huge potential of these innovative future technologies. He is currently covering all the latest updates and developments in the crypto industry.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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