Bitcoin’s bulls were pleased to witness yesterday’s rally, which allowed the cryptocurrency to surge as high as $7,400 from its recent lows of $6,800 that were set earlier this week when bears attempted to generate another capitulatory BTC downtrend.
The aftermath of this movement may not be as bullish as some investors had previously hoped, however, and a few factors point to the possibility that BTC will push higher as long positions overleverage themselves, leading to a subsequent long squeeze.
Bitcoin Once Again Consolidates at $7,300, But it May Soon Climb Higher
At the time of writing, Bitcoin is currently trading up marginally at its current price of $7,390, which is just a hair beneath its 24-hour highs of just over $7,400 that were set earlier this morning.
The rally that occurred yesterday came about concurrently with news regarding the US airstrike on a top Iranian military official, which led traditional safe haven assets like gold and crude oil to surge.
Because there was a close correlation between the two events, some analysts have noted that the recent rally may signal that BTC is becoming a safe haven asset, although it is still too early for this possibility to be confirmed and it is highly contested by multiple prominent analysts.
In the near-term, Bitcoin may soon climb higher, which could lead long positions to overleverage themselves, leading to a bear-favoring long squeeze.
“Funding turned. Gamblers hunted. Cumulative long/short delta is positive now. Funding back to positive. Still room to run but something to note as long squeezes can become part of picture. Takes time and something I’ll be watching,” CryptoISO, a popular crypto analyst on Twitter, explained in a recent tweet.
Funding turned.
Gamblers hunted.
Cumulative long/short delta is positive now.
Funding back to positive.
Still room to run but something to note as long squeezes can become part of picture.
Takes time and something I’ll be watching. pic.twitter.com/PNjlUH9uyw
— CryptoISO (@crypto_iso) January 3, 2020
How BTC Responds to Near-Term Resistance Could Signal Where It Will Trend in Coming Months
It appears that the factors mused by CryptoISO above could come in conjunction with BTC tapping a strong resistance level.
Scott Melker, a popular crypto analyst, explained in a recent blog post that the resistance right around Bitcoin’s current price region is likely being shorted by savvy traders.
“At this moment, price is retesting a key support as resistance – the purple line that we have looked at a number of times. I would venture that many experienced traders are opening shorts at this level, expecting yet another slow bleed back down after a short squeeze,” he noted.
If the recent rally truly was just a short squeeze, it is probable that bears will continue to exert control over the cryptocurrency in the near-term, and possibly force Bitcoin back into the $6,000 region.
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