Bitcoin Short Squeeze, Can It Strongly Rebound After Christmas?
BTC surged 4.16% yesterday.
The number of open contracts increased, and the financing rate decreased, indicating that there are quite a few short traders betting against Bitcoin.
Yesterday, Bitcoin slightly rose following the festive atmosphere, and the current price is $98,056, an increase of 4.16% from the previous day.
Before Christmas, Bitcoin surged from a low of $93,461 to a high of $99,419. This increase has analysts discussing Bitcoin's performance after Christmas.
Cryptoquant analyst Traders Oasis stated that BTC may consolidate during Christmas, and once the demand for short positions increases, there will be a wave of market movement.
Bitcoin Short Position Demand Soars
Traders Oasis mentioned that institutional demand has been insufficient in recent weeks, leading to a correction in Bitcoin's price.
He analyzed that the Coinbase premium index did not follow the price increase, which caused the price to drop. However, he expects that once the index enters the negative zone, the market will rise again.
He also mentioned that the financing rate has decreased, which is a positive sign, and the open contracts have increased significantly.
With a decrease in funding rates and an increase in open rates, it indicates that many are shorting. The more people shorting, the more it suggests they believe the price will drop.
However, when the number of buyers increases, and the demand for short trades becomes high, shorts may get squeezed. This squeeze would lead to more buyers and a stronger rebound.
Looking at the past three days, Bitcoin's demand has been vigorous. The BTC fund flow ratio rose from 0.084 to 0.137.
An increase in the fund flow ratio indicates that more money is being invested in Bitcoin. This is a good sign, showing that people are willing to invest their money in BTC. Consequently, prices rise due to increased buying.
Moreover, as more money flows in, the BTC in exchanges decreases, making it scarcer. With more people buying cryptocurrencies, it becomes scarcer, and the rise in the inventory-to-flow ratio proves this.
As Bitcoin becomes scarcer, prices rise. With increased demand and limited supply, prices naturally go up.
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