Bitcoin Short Squeeze Sparks $56K Breakout: What’s Next?
Elena R10 Sept 20241 min read
The recent Bitcoin (BTC) price rally above $56k has raised expectations of further crypto rebound in the coming days. Bitcoin’s daily Relative Strength Index (RSI) has been forming a bullish divergence amid the rising demand from whale investors.
On Monday, US spot Bitcoin ETFs, particularly Fidelity’s FBTC, saw net cash inflows of approximately $28 million. Additionally, on-chain data reveals a notable increase of about $300 million in stablecoin supply across centralized exchanges over the past 24 hours.
Short Squeeze Impact on Bitcoin Price
According to market data provided by Santiment, the possibility of a Bitcoin short squeeze in the near term has significantly increased based on the heightened short funding rates. Ideally, an increase in short position in crypto exchanges leads to their forced liquidation, which attracts whale traders to long the instrument and vice versa.
As a result, Santiment believes the chances of further Bitcoin pumping in the coming days are higher until the funding rate on major exchanges turns long.
Bitcoin Technical Analysis Ahead of US CPI Data
Ahead of tomorrow’s US CPI data, which will heavily determine whether the Fed initiates much-awaited interest rate cuts on September 18, Bitcoin price is expected to register heightened. From a technical analysis standpoint, Bitcoin price has been retesting the lower border of a weekly falling channel.
Most importantly, Bitcoin price has been forming a potential reversal pattern characterized by a weekly head and shoulders (H&S) pattern coupled with a bullish divergence on the RSI.
As a result, Bitcoin price could easily pump towards the support level around $59k before retracting towards $50k.
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