Derivatives market provides some obvious reversal signs
Bitcoin’s most recent rally can be considered unexpected as the first cryptocurrency has shown no signs of an upcoming price increase. However, it is safe to say that the whales were gearing up for an increase in speed according to the reduced pressure.
According to short liquidations, large investors were purposefully pushing the price of the first cryptocurrency upward, causing at least two large short squeezes on its way to $20,000.
Apart from the behavior of investors on the market, the above short squeeze has been the biggest in an entire year. Considering bitcoin’s price performance through 2022, a major minor squeeze is something investors should have expected during the first strong price spike after a long consolidation period.
As funding rates suggested, traders were actively shorting the first cryptocurrency on its way to $19,000, as it has been the upper border of the consolidation range for more than three months. The large short volume coming from retail was the main fuel for the short squeeze that put BTC at the price level we are seeing now.
what happens next?
Unfortunately, the bulls have abandoned the active support provided to BTC two days ago. Ahead of the weekend trading session, whales and institutional investors are leaving the market, and so is volatility and liquidity, which is why short-term consolidation may be the most likely scenario.
Technically, Bitcoin has a chance for a further continuation of the rally considering the lack of pressure bears have been putting on the asset in the last few months. Indicators like moving averages and MACD are confirming the reversal on short-term timeframes.
