BTC is at a crucial moment with a potential short squeeze

Bitcoin continues to move sideways and has exhausted retail investors. Given the low volume and the volatility structure of the market, an important step is expected in the coming days. Both bears and bulls have struggled to win the game in the past few days.

The price is currently trading just above the critical area at USD 43,000-44,000 (orange) and a dip or break below this zone will determine the direction of the medium-term trend. In the event that price bounces off the support area heavily, hitting $ 75,000 isn’t too far off. However, if the bears show more strength, price will return to the next major support area at $ 32,000 (green), which has been maintained for the past 12 months.

Therefore, the formation of a lower lows on a dip to $ 30,000 would confirm a bear market in the medium to long term.

BTC / USDT daily chart | Source: TradingView

Onchain analysis

The following graph illustrates the estimated leverage ratio and price. It soared, its highest level since last year. At the same time, the mood on the futures market is almost neutral (average financing rate is close to zero).

It indicates that volatility is imminent. This could be due to the liquidation of positions with high leverage.

Source: TradingView

Check out Binance and Bitfinex’s Open Interest (OI) during the recent shakeout. We can see that Bitfinex’s open interest is more volatile than Binance’s. In the past, whales and big players used Bitfinex to open their positions. Therefore, considering the significant increase in Binance’s open interest, we can conclude that the increase in open interest is being driven by retailers as they mainly trade on Binance.

Since Binance’s funding rate is low, most futures positions are short, so the likelihood of a short squeeze is higher.

Source: TradingView

You can see the BTC price here.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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