A look into what happened in one of the most bullish days of 2018.
A look into what happened in one of the most bullish days of 2018. Yesterday we asked how long the bears could continue to short the market. The question was short-lived as four hours after the newsletter was distributed some big things happened — the amount of bitcoin shorts was unheard of. That’s a common indicator for a ‘short squeeze’ — those who are betting against the market get trapped during a fast price rise.
By 12:00 BST, bitcoin was hanging by a key resistance — the area that bitcoin failed to break upwards since its downtrend on March 5th. The selling momentum has been fading away continuously. Many thought the easy trade route was to bet against the market. This prompted some analysts to discuss this recent ‘short squeeze’ opportunity.
At 12:05, a tsunami of buy orders surfed through all major exchanges resulting in a 16% price rise in 30 minutes. Some called this the most traded moment in bitcoin’s history. Likely, caused by bots picking up an early order on Bitfinex — perhaps from a large institutional investor who said “enough”; further aided by the cascading closing of short positions, which automatically turn into buy orders when they are liquidated, further prompting more liquidations at higher prices.
Bitcoin is still hanging below the resistance marked in this blue block — a range of past trading activity, of which however, the risk-return for a new trade is not so attractive. Some bears now claim they are even more bearish now than they were two days ago as the short squeeze was not driven by fundamentals.
Two important bullish reversal indicators were signified through these moves — the consolidation necessary for an alts season to commence and the continued validation of the long-term bullish trend that is making some influential analysts believe bitcoin will be priced around £23k ($33k) by this July.
However, most importantly, bitcoin should close above £5.8k ($8.3k) this weekend. Otherwise, it signals that this may not have been the bottom. If it goes above £6.3k ($9k) then bulls are out. Meanwhile, all the top 100 projects by market cap are in the green today, having risen on average 15%. This is due to the fact their prices are pegged to bitcoin — as their trading pairs are priced against BTC. Note, only 15 projects appreciated more than 5% against bitcoin over the past 24 hours.
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