Bitcoin has a very swingy and rally mode. It was representing its largest daily gain in six weeks. Since shorts covered positions over the weekend. The cryptocurrency was trading around $38,874 at time of this report and is up 14.5% over the past 24 hours. Sentiment changed and moved from excessive bearishness after a sharp correction in May and two months of stabilization between $30,000 and $40,000. Some of the analysts anticipate further upside and view the recent bounce as a trend reversal.
“We turned bullish last Wednesday but weren’t expecting the short squeeze to happen quite so soon,”. QCP Capital talked about in a Telegram chat. “We’ve been pleasantly surprised by how supported the market was after Wednesday and sentiment flipped decisively bullish into the weekend.”
“This move higher feels more like a bounce back into a neutral state after being overstretched to the downside below $30K,” QCP mentioned. “The real pain could be lurking from short gamma positions above the $40K level.”
“Bitcoin momentum is back, and incremental endorsements on Wall Street could easily be the catalyst to help prices rally towards the $45,000 level,”. It was Edward Moya’s saying, strategist at Oanda. Blockchain metrics are also representing positive signs for bitcoin.
“Bitcoin has slowly trickled back into the hands of longer-term holders throughout these months after the dramatic sell-off from all-time highs in May,” Sean Rooney said. He is the head of research at crypto asset manager Valkyrie Investments.
“Historically this trend of entities that hold long term does not reverse quickly, which will likely result in further advance in price as we move towards Q4,”. Rooney continued.
Pressure on stablecoins
The strong leap in bitcoin over the weekend happened as shorts covered positions. Hardly 2,000 short positions were liquidated over a two-hour period,. This data was according to data from CryptoQuant. The short-squeeze rally happened in spite of regulatory pressure surrounding stablecoins.
“The short order liquidation amount in the past hour reached $640 million, which is the largest single-day liquidation volume in more than two months,”. WuBlockchain in a tweeted that on Monday.
Bitcoin Price Range
A strike price of $40,000 represents the largest source of open interest for the upcoming bitcoin options expiry this Friday, which could be a source of volatility.
“BTC has been range bound between $28K-$43K and most expect an upside squeeze to occur on a break above $40K,”. Coinbase wrote about it in a newsletter to institutional clients on Saturday.
“But with overwriting strategies forced to settle on lower strikes ($35K-$38K), a sharp short-covering rally will likely begin from lower levels,”. Coinbase also continued.
Investors dragged money out of digital-asset funds as bitcoin dropped under $30,000 last week. Based on a report published on Monday by CoinShares. Outflows accrued with negative sentiment that preceded a near-24% price jump in bitcoin over the past week.
On Monday’s crypto price rally ,bitcoin increased above $38,000. This could cheer digital-asset inflows because many investors have been on the sidelines since the sell-off in May.