A Data Suggests That Short Squeezes Bias is Forming in the BTC Market
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On January 10th, Bitcoin plummeted below USD 40,000 with a 1.53% loss, the first time it dipped below the USD 40,000 psychological mark since September 2021. Following increased concerns of hawkish policy from the U.S. Federal Reserve, a broader slump in the crypto area accompanied by the sell-off in the traditional financial market. But at the time of writing, BTC price bounced back above USD 42,000 again. Though price expectations for Bitcoin bearish will be more reasonable based on some macro factors, there is some analysis in favor of the potential Bitcoin bull.
Raising Rates or Tapering QE Should Not Be Bearish Enough for BTC Uptrend
The U.S. Bureau of Labor Statistics will release The Consumer Price Index (CPI) for December 2021 on January 12th. As expected, CPI data will rise 7% for the year through December, which indicates that the rising inflation will push the FED to turn more hawkish towards monetary policy.
However, the economist Alex Krüger recently presented a thesis in favor of the bulls via Twitter saying that: “This has been extraordinarily bearish due to the speed of the Fed’s turnaround. Raising rates or tapering quantitative easing (QE) should not be bearish enough to change the upwards trend across assets.”
Krüger also noted that Bitcoin has already dropped too far from its record highs, insofar that it now stands technically oversold. If the upcoming CPI metrics is lower than 7%, BTC could react with a bounce back to USD 45,000.
A Near-Term Short Squeeze is Developing, According to Glassnode
Based on Glassnode’s latest Dominance Oscillator Between Long and Short Liquidations chart, it shows that traders who longing BTC are consistently being liquidated and in loss since November 2021.
As BTC price trending lower and bear conviction chases the market down, while the volume of open interest rises to new highs, which means there are not many more long trades left to be liquidated. To put it simply, BTC price is close to the bottom and a near-term short squeeze is developing.
Technical Forecast - The Next Bull Target is USD 44,000
From the 4H chart, Bitcoin price rallies above USD 42,700 and is trading around the upper Bollinger Band. It also breaks the downward trend line formed since November. It is worth noting that a golden cross appeared in the MACD indicator and the histogram bar is positive, which is a bullish signal, indicating an upward momentum. BTC price’s next target will be the 38.2% Fib level (USD 44,000).
How to Trade BTC in Large Price Movements?
According to the analysis above, we could predict that the BTC bull will get on the stage again in the near future. You can buy the dip in spot trade to make profits. But if you want to get bigger gains, you should try BTC futures contracts.
BTC futures trading with 100x leverage is a good instrument. Every price move can give you a chance to make gains. BTC futures trading enables traders to buy/up or sell/down BTC. As long as there is market volatility, there is opportunity to make profits.
For example, if you use 1 BTC to open a 100 BTC long position when it priced at USD 39,000 on January 10, then BTC increased to USD 42,200 on January 11 and you closed the position to take profits. You will earn (USD 42,200 – USD 39,000) * 100 BTC / USD 42,200 = 7.33BTC, with an ROI more than 700%.
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