Bitcoin Short Squeeze: Are You Ready for a Bullish Divergence?
Fear, uncertainty, and doubt dominated the cryptocurrency market this week as volatility took over and most cryptocurrencies crashed. Bitcoin has also suffered from this bearish sentiment, creating a scenario favoring an imminent short squeeze for the asset.
Bitcoin Derivatives Market: All-Time High Open Interest
In particular, the derivatives market open interest (OI) in Bitcoin remains at all-time high levels. On June 15, updated data from CoinGlass showed a $34.5 billion OI with BTC valued at $66,224.
- High Speculative Demand: There is a notable imbalance in opened long and short positions, favoring short squeezes due to leveraged trades creating upward liquidity pools.
- Liquidations: There are over $2 billion worth of Bitcoin short liquidations, with relevant pools going as high as $73,000, making the $72,000 to $73,000 zone a likely target in a short squeeze scenario.
Short Squeeze Incoming? Bitcoin Bullish Divergence
Professional trader and analyst, Credible Crypto, has spotted indicators suggesting a short squeeze. A bullish divergence with the cumulative volume delta (CVD) indicates a potential supply shock as buy orders are consumed despite increased selling pressure.
“CVD is not the same as volume- CVD measures the net difference between market buy and sell orders- so when it’s trending down it means there are more market sells than market buys. Typically this would cause price to drop, but when price isn’t dropping despite there being a lot of market selling…what does that tell us?”
Credible Crypto
Technical analyses and awaiting liquidations do not guarantee a short squeeze. The market’s state changes rapidly as cryptocurrency traders reassess their positions, changing exposures, market orders, and open interest, impacting the likelihood of high-volatility events and shifting trends.
Hot Take: Prepare for a Potential Bitcoin Short Squeeze
Are you ready for the possibility of a bullish divergence in the Bitcoin market? Stay informed about the potential short squeeze and the implications it may have on the cryptocurrency market. Keep an eye on indicators and market trends to navigate through the volatility effectively and make informed decisions.
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