On Thursday, Bitcoin (BTC) showed substantial volatility, with a short squeeze. As Bitcoin enthusiasts awaited the US Securities and Exchange Commission's (SEC) sanction of a spot Bitcoin exchange-traded fund (ETF), this tumultuous sequence rendered enduring traders in disarray.
Bitcoin Crash Wiped Out $1 Billion In Open Interest
The price of Bitcoin experienced a significant 8% surge, surpassing psychological milestones of $36,000.00 and $37,000.00 en route to an intra-day high of over $38,400. The increase in value favored long positions, leading to the liquidation of short positions worth more than $1.56 million.
Nevertheless, the joy was short, as the market experienced a decline, culminating in the principal cryptocurrency falling by approximately 5%. The long squeeze resulted in the liquidation of long positions valued at approximately $17 million, erasing open interest of approximately $1 billion in a matter of hours.
To clarify, a short squeeze refers to a circumstance that precipitates a substantial increase in the value of an asset. It is characterized by a substantial presence of short sellers, who are investors placing bets on the devaluation of the asset's price. The short squeeze is triggered by an unanticipated surge in price, which gains momentum as a significant portion of short sellers choose to liquidate their positions.
The sharp increase in value occurred as Bitcoin speculators were awaiting the approval of spot Bitcoin ETFs in response to a recent statement by James Seyffart, a specialist at Bloomberg Intelligence. He emphasized that the SEC would have a "brief window" of at least eight days to potentially approve all twelve spot BTC ETF registrants, including Grayscale GBTC.
Bitcoin (BTCUSD) Technical Analysis
In the daily chart of BTCUSD, the recent price shows a corrective bullish pressure within an ascending channel. Moreover, the bullish spike above the channel resistance and immediate pullback suggest an aggressive selling pressure, which could end up as a trend reversal.
In the broader context, the bullish trend in the BTCUSD daily chart is strong, where the bull run from the 26,556.75 level needs some correction before forming another higher high.
In this context, downside pressure below the 34,547.73 level could be a short-term bearish opportunity, targeting the 30,000.00 psychological level.
On the other hand, the long-term trend is bullish and bulls can reverse the market pressure at any time from the dynamic 20-day EMA support. In that case, the next resistance level would be at the 48,000.00 level.
