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Bitcoin price is already showing some signs of recovery after reaching support above $108,000 following the market flash crash. In the next weeks, there have been some notable developments surrounding the most important cryptocurrency by market capitalization, suggesting that the worth might be preparing for one more rise. This is completed by crypto analyst Luca on the platform
Bitcoin indicators point to an increase
In the post, Luca outlines numerous aspects that suggest Bitcoin price is more likely to proceed rising as a result of the war between bears and bulls. The analyst pointed to the decline that plagued the cryptocurrency earlier within the week, explaining that crypto traders initially assumed it was as a result of long positions being squeezed out of the market.
However, one thing stood out that suggested this wasn't the case. First, the funding rate was declining, which is generally the case when long traders are worn out. However, this was often accompanied by a drop in open interest, and that was not the case.
Source: X
During the market decline, open interest had actually increased. Coinglass data shows that while Bitcoin open interest has since declined from its all-time high of $92 billion in the beginning of October, there was a notable increase earlier within the week.
Open interest had increased from around $71 billion over the weekend to over $76 billion on Tuesday. Luca pointed this out and explained that this only means one thing: short traders are literally increasing their bets that the Bitcoin price will proceed to fall.
With this in mind, the crash that Bitcoin price suffered earlier within the week gave the impression to be a direct results of short positions accumulating, relatively than long traders being worn out. This implies that the vast majority of traders are actually betting that the worth will proceed to crash.
The interesting thing about such developments is that they’re often harbingers of the subsequent uptrend. The market rarely moves within the direction the bulk expects, as evidenced by the flash crash of October tenth. Therefore, as increasingly more traders expect Bitcoin price to crash, it is probably going that the worth will rise as an alternative.
“Historically, this sort of setup often drives the subsequent big uptrend, as excessive short exposure creates the right conditions for a brief squeeze.” Luca explained it within the post. With Bitcoin still trading relatively high, a brief squeeze could provide the momentum needed for the worth to succeed in recent all-time highs.
BTC loses control of $110,000 | Source: BTCUSD on Tradingview.com
Featured image by Dall.E, chart by TradingView.com
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