On Monday, Bitcoin soared above USD 53,000. At 1:15 PM GMT, the currency exchanged hands for $ 53,324, up 7.07% over the past 24 hours.
However, within hours, roughly $ 150 million worth of shorts were liquidated as the bulls returned to take a firm hold on the market. The cryptocurrency soared from $ 47,000 to over $ 53,000 as the short squeeze occurred after a bear market decline late last week.
Other cryptocurrencies such as ETH and BNB also experienced a short squeeze as they were up about 15%. Given that Bitcoin rebounded by 12% within one day, it looks like the futures market has completely reset.
Bitcoin Short Squeeze is bullish
A short squeeze refers to the fact that short sell orders on the futures market are liquidated in a short period of time. When the shorts are liquidated, short sellers will have to buy back their positions. This automatically ensures that the demand from buyers in the market increases.
Therefore, the number of shorts is rapidly declining and long contracts or buy orders begin to dominate the market.
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In the case of Bitcoin, the funding ratio has remained relatively low over the past 24 hours, despite the strong rise of BTC. According to Bybt.com, the funding rate on the major exchanges for Bitcoin is below 0.01%, which is below the neutral rate.
At the current rate, there are still more longs in the futures market, which could push the price up.
Lex Moskovski, the CIO at Moskovski Capital, said:
~ $ 150 million # Bitcoin shorts liquidated on this short rise. Nothing smells better than bears roasted in the morning. “
Traders’ sentiment is showing bullish expectations
In the short term, many traders are optimistic that the USD 55,000 price level is important to recover due to the likelihood of Bitcoin reaching its previous ATH.
Johnny, a cryptocurrency derivatives trader, said:
“Swept the lows and now we have a very strong bounce. We’re not out of the woods yet. Claim $ 55,500 and then we can talk about new ATH. Now play it level by level. Strong response so far. “
Another trader, Adnan Van Dal, noted that if the price of BTC does not fall before the US market opens, the chances of the price going higher is very likely. He wrote on Twitter:
“If $ BTC can open up the US (EUR am Man shrugs) think cud will be a little bit okay. Durable goods orders are open, actual data was good, SPX at ATH posted useful profit on Friday and started business. Think helps – accidental SPX / $ BTC weakness a thing this year. TSLA wildcard later. “
As it stands now, it looks like the bulls are back. The bears’ grip on the market is short-lived. Currently, the price is aiming for a recovery above USD 55,000 and the likelihood that the benchmark cryptocurrency will hit a new record any time soon cannot be ignored.
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Featured image from Pixabay, Charts from Tradingview.com