Bitcoin’s Technical Signals Show Signs of Improvement, Potentially Triggering Short Squeeze
Cryptocurrency traders should remain attentive as a number of important technical indicators for Bitcoin are displaying positive signals, as per the analysis by Markus Thielen, the head of research at 10x Research. These indicators have the potential to trigger a short squeeze if certain macroeconomic events align.
Thielen has observed that Bitcoin’s relative strength index (RSI) has reached a low point, indicating possible improvements in the speed and variation of its price movements. At present, Bitcoin’s RSI score is at 61.13, a decrease of 8% since July 21, suggesting some room for an upward movement according to Bitbo data.
Additionally, Thielen noted that the open interest (OI) for Bitcoin futures has risen by 13.62% since August 6, following a decline in Bitcoin’s price to below $50,000. This increase in open interest implies that more traders are optimistic about the potential for a price increase for Bitcoin, which is currently trading at $59,391.
Another significant metric is the put-to-call volume ratio, which measures the demand for sell versus buy options. Presently, the ratio stands at 66.33% calls and 33.67% puts, resulting in a put-to-call ratio of 0.51. This imbalance in favor of call options could potentially lead to a short squeeze, as more traders holding short positions may be compelled to cover.
A pseudonymous crypto trader known as Mister Crypto also echoed this sentiment, stating that a “massive Bitcoin short squeeze will be inevitable.” While Thielen does not believe that the market is substantially short, he suggested that short traders may be compelled to cover their positions, particularly in light of “better election odds” for Donald Trump leading up to the United States presidential election in November.
Moving forward, Thielen stressed that the market is currently at a critical juncture, particularly as investors eagerly anticipate the decision of the United States Federal Reserve on interest rates. He highlighted that a signal indicating a potential rally in the stock market could have spill-over effects on Bitcoin, potentially leading to a price increase.
It is essential to understand that the information presented in this article should not be considered as investment advice or recommendations. As with any investment or trading decision, there are inherent risks involved, and readers are urged to conduct their own comprehensive research before making any financial decisions.
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