cpeditor
- Analysts say Bitcoin’s sharp advance, combined with heavy short liquidations, has many of the characteristics typically seen around market bottoms, although broader macro risks remain.
- Bitcoin has gained notable momentum over the past few days, according to Mati Greenspan, former senior market analyst at eToro and founder of Quantum Economics.
- Greenspan said the current setup resembles previous market-bottom formations. These often start with a short squeeze and a powerful upward candle, followed by breaks through important technical resistance. As the rally gathers pace, investors who had been waiting for Bitcoin to fall toward $40,000 may instead rush to buy to avoid missing the recovery.
- While Greenspan acknowledged that another selloff remains possible, he said he would not make that his main expectation. He argued that sharp rallies can quickly turn into FOMO-driven buying.
- Jason Fernandes, a market analyst and co-founder of AdLunam, took a more cautious stance. He said it is too soon to declare the bear market over without sustained spot ETF demand and clearer signs that interest rates are becoming less restrictive.
- Fernandes warned that Bitcoin could struggle near major resistance levels. BTC climbed to about $79,200 on Friday before retreating toward $77,500.
- Greenspan maintained his bullish outlook, saying the current market structure looks familiar and that the chances of a significant pullback appear relatively low at this stage.
- He pointed to several developments supporting crypto, including White House discussions about Bitcoin Treasury strategies, congressional work on digital-asset market-structure legislation, and efforts by the SEC and CFTC to establish clearer regulatory rules.
- Fernandes also highlighted the role of macroeconomic developments, particularly the Treasury’s decision to double its bond buybacks to $4 billion. The move pushed long-term yields lower and helped improve appetite for risk assets.
- He said Bitcoin’s lengthy consolidation below the $64,000-$66,000 range had given traders time to build significant short positions.
- Once Bitcoin moved through that range, short sellers were forced to close their positions, triggering a cascade of liquidations that accelerated the rally. Breaks above $66,000 and the 200-day moving average also prompted algorithmic buying.
- Adam Morgan McCarthy, lead researcher at London-based digital-asset liquidity and market-data firm LO:TECH, said forced short covering was a major factor behind Bitcoin’s move toward $70,000.
- More than half of Bitcoin’s 7.1% gain on Wednesday occurred within a single hour, despite that period accounting for only about one-third of the day’s trading volume. McCarthy described the concentration as a classic short-squeeze pattern.
- McCarthy also compared Bitcoin’s rally with gold’s performance. Gold rose steadily after Treasury announced the larger bond purchases, without the forced buying that contributed to Bitcoin’s rapid move.
- He argued that gold may therefore provide a clearer indication of investors hedging against inflation and currency risks, while Bitcoin’s rally has been heavily influenced by derivatives positioning.
- Tobias Bauer, co-founder of TBV, highlighted another sign of crowded trading. Binance processed roughly $1.26 billion in Bitcoin futures volume within one minute, about 361 times the normal one-minute average.
- With funding rates approaching exchange limits, Bauer warned that traders are becoming increasingly concentrated on the long side. That makes leveraged bullish positions more expensive and potentially more exposed to a reversal.
