BTC surged to $71K as it hit considerable leveraged short positions around $70K. What’s next for the asset?
- BTC crossed $70K and hit a 4-month high, partly driven by a liquidity grab. BTC was only 3.5% away from its ATH, but there was a roadblock to clear.
Bitcoin [BTC] crossed the $70K psychological level and surged to a four-month high of $71.5K. The upswing brought its ‘Upbtober’ gains to 11%, marking an effective breakout from its multi-month consolidation range since March.
Why is Bitcoin up?
A liquidity grab drove part of the pump above $70K. There were considerable liquidity clusters (short positions) between $69.4K and $70K, as noted by BTC analyst and trader CrypNeuvo.
For context, the price action tends to follow these liquidation levels (bright yellow), influenced largely by market maker moves. Hence, the cluster at $ 70K acted as a magnet for the recent upswing, liquidating considerable short positions at $70K.
Source: Hyblock
Over $80 million shorts rekt
According to Coinglass data, $88 million positions were liquidated after BTC broke above the $70K psychological level.
Speculators who placed bets for likely price rejection at $70K (short positions) suffered the most, with nearly $83 million in losses in the past 24 hours.
Source: Coinglass
By extension, this also suggested a strong bullish sentiment as the market awaits US election outcomes next week.
With increasing odds of Trump winning the US elections per predictions sites, Bitfinex analysts believed that US elections could be a ‘perfect storm for BTC.’ The analysts stated,
“The convergence of election uncertainty, the “Trump trade” narrative, and favorable Q4 seasonality create a perfect storm for Bitcoin, promising an exciting period ahead regardless of noisy price movements heading into the election in two weeks’ time.”
Analyst Peter Brandt shared a similar projection and believed the move above $70K might start the much-awaited post-halving parabolic rally.
That said, there was renewed demand from US investors as BTC soared, as noted by the reversal of the Coinbase Premium Index.
Source: CryptoQuant
In most cases, a strong US demand (green) always coincides with a sustainable recovery for BTC.
While the recent improvement was great for BTC, the weak reading meant that investor interest was still relatively low compared to March, when BTC hit a new all-time high.
On the daily price chart, BTC was in a bullish market structure. It was only 3.5% away from its ATH and could soon hit price discovery.
However, it hit resistance, and a bearish order block (red) formed at March’s ATH. For the uptrend to continue in the short term, BTC had to clear the $71K-$73K roadblock.
Source: BTC/USDT, TradingView
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