Bitcoin, the world’s leading cryptocurrency, has experienced a remarkable surge, breaching the $26,500 mark and igniting discussions about a possible wave of short liquidations. The recent upward trend observed over the past few days suggests a significant shift in market sentiment, yet it remains to be seen whether this rally has the staying power to confirm a full recovery.
The cryptocurrency landscape has been an exhilarating roller coaster ride in recent weeks, subjecting investors to extreme volatility. One catalyst behind the surge was the announcement by Blackrock, one of the largest asset managers, expressing intentions to file for a Bitcoin exchange-traded fund (ETF). With the approval of 575 out of 576 ETFs, the markets began to regain strength. Bitcoin, which had been struggling around the $25,300 range, swiftly ascended above $26,000 and is presently trading around $26,500.
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The question arises: were Bitcoin shorts caught off guard, or did bullish investors swoop in to save the day? Whenever the price undergoes a substantial recovery exceeding $1,000, the likelihood of a short squeeze emerges. This triggers significant liquidations of short positions, propelling the price further above critical resistance levels. However, in the current scenario, the price surge appears to be fueled primarily by organic Bitcoin purchases rather than short liquidations. Data from Cryptoquant reveals minimal instances of short liquidations in recent days.
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The last notable event driven by short liquidations occurred on June 6, resulting in a $31.85 million liquidation and pushing the price from $25,351 to $27,230 within a single day. Subsequently, the price retraced, finding support near $24,800 and consolidating for a period. However, the recent short liquidations amount to approximately $15 million, coinciding with Bitcoin’s surge from lows to the current level of $26,500. With fewer instances of short liquidations, this uptrend is suspected to be driven by genuine Bitcoin accumulation.
Collectively, Bitcoin appears to have escaped the alarming downturn, dispelling concerns of a drop below $24,000. Nevertheless, to confirm the bullish outlook, the price must surpass the $27,800 mark. Until then, the specter of a bearish reversal may continue to cast a shadow over the ongoing rally, keeping investors on edge.
Stay updated on Bitcoin’s trajectory as it navigates turbulent markets and sets its sights on potentially reaching $30,000.
Written by Agbo Obinnaya.
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