On Monday, Bitcoin surged above $53,000. At 13:15 GMT, the coin was exchanging hands at $53,324, a 7.07% increase over the last 24 hours.
However, about $150 million worth of shorts were liquidated within a few hours as bulls returned to take a firm grip over the market. The cryptocurrency rose from $47,000 to over $53,000 as the short squeeze occurred following a fall to the bear market late last week.
Other cryptocurrencies like ETH, BNB, also experienced short squeeze as they rose by around 15%. As Bitcoin recovered by 12% within a single day, it appears the futures market is completely reset.
Bitcoin Short Squeeze Is Bullish
A short squeeze refers to when short-sell orders in 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 causes buyer demand to increase in the market.
Hence, the number of shorts rapidly declines, and long contracts or buy orders begin to dominate the market.
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In the case of Bitcoin in the last 24 hours, despite BTC’s strong rally back up, the funding rate has remained relatively low. According to Bybt.com, the funding rate across 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 to go higher.
Lex Moskovski, the CIO at Moskovski Capital, said:
“~$150M of #Bitcoin shorts liquidated on this brief move up. Nothing smells better than roasted bears in the morning.”
Sentiment From Traders Show Bullish Expectations
In the near term, many traders are optimistic that the $55,000 price level is an important one to reclaim for the chance of Bitcoin reaching its previous ATH.
Johnny, a cryptocurrency derivatives trader, said:
“Swept the lows and now we have a very strong bounce. We are not out of the woods yet. Reclaim $55,500 and than we can talk about new ATH. For now, play it level by level. Strong reaction so far.”
Another trader, Adnan Van Dal, noted that if the price of BTC doesn’t drop until the US market opens, the chance of the price going higher is highly probable. He wrote on Twitter:
“If $BTC can make it to the US open (EUR am Man shrugging) think cud be ok for a bit. Durable goods orders at open, actual data’s been good, SPX near ATH post useful Friday profit taking & started firm. Think helps – coincident SPX / $BTC weakness a thing this year. TSLA wildcard later tho.”
As it stands, it appears that the bulls are back. The bears’ grip on the market has been short-lived. Currently, the price is aiming for a recovery above $55,000 and the likelihood that the benchmark cryptocurrency will hit a new all-time high soon cannot be ignored.
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Featured image from Pixabay, Charts from Tradingview.com