The market indicators and targets called by traders suggest that the buyers might be exhausted at this level in Bitcoin [BTC]. However, Bitcoin continues to rise past key resistance levels like a cake walk. While the fundaments have been quite the same during the week, the rise is unprecedented.
B.Biddles, a Bitcoin Bull summarized the market sentiments in his tweet,
Took a good chunk of profit in the upper-mid 6.3s. My spidey sense has been tingling since last night. I’ve learned to follow it. Even if we keep bullishly continuing, I don’t regret listening to my gut. Waiting for a good re-entry
Short Squeeze Driving the Price Up?
One possible explanation of the rise is ‘short squeeze.’ Due to the impending fears of the revival of the bear market and adverse piece of news in Bitfinex-Tether issue and Binance hacks, markets were probably expecting a correction.
Nevertheless, positive developments like Fidelity cryptocurrency platforms in the market were much better received as the price broke above $6000 levels. This might have set off the struggle of the short-orders held by the bears.
A ‘short squeeze’ is a risk associated with short orders. In a market that is heavily shorted a big positive move can further develop upward pressure as the short requests are made to buy at the current price of closing their orders. Moreover, Bitcoin [BTC] short orders on Bitfinex suggest that liquidation is occurring as the bears have started to close their short positions.
Willy Woo, trade and chart analyst noted in a tweet that the rise has had no significant effect on the on-chain volume. This suggests that fresh adoption and on-chain activity is still unaffected. Hence, the market could be driven by Exchanges alone. The short squeeze creates a lucrative profit-making opportunity for high-volume traders or ‘whales’. He tweeted:
All this happens without any on-chain activity. As it’s an exchange driven game, no real investors are buying into the rally.
Do you think that a pullback will happen before Bitcoin [BTC] reached $7000? Please share your analysis with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com