Bitcoin on the Brink: Short Squeeze Looms as Market Participants Bet Big

Bitcoin’s price has been on a wild ride, and market participants are now betting on a fresh short squeeze as liquidity pours into exchange order books. After a brief dip to $117,200 on Thursday, BTC/USD is regaining its footing, setting the stage for a potential upward price spike. The big question on everyone’s mind: will the bears get squeezed out of the market?

Key Takeaways

Here are the key points to keep in mind:

• Market participants are expecting a short squeeze as liquidity builds up around the current price.
• Late shorts are in the crosshairs after a punishing session for longs the day prior.
• Bitcoin is slowly but surely regaining its dominance over the total crypto market cap.

The Stage is Set for a Short Squeeze

Data from Cointelegraph Markets Pro and TradingView shows that BTC/USD dropped to local lows of $117,200 on Bitstamp, clearing out some bid liquidity on exchange order books. However, market participants are now focused on the asks above spot price, with a large build-up of overhead liquidity confirmed by monitoring resource CoinGlass. This liquidity cluster is likely to have a “magnet” effect on price, with late entrants potentially getting punished by snap moves up or down.

Traders and investors are taking notice, with Mister Crypto predicting a “massive short squeeze” and Crypto Rover describing it as the “obvious” next step. Daan Crypto Trades had earlier identified $120,000 and $115,000 as key price levels to watch, noting that “price wants to take both of those out at some point.”

BTC Dominance on the Rise

In a sign that Bitcoin is regaining its mojo, altcoin momentum is starting to struggle. BTC dominance is up 0.5% on the day, building on an existing comeback after nearly hitting 60%. Rekt Capital notes that Bitcoin is still holding higher ground, despite the altcoin market reacting as if BTC has broken down from its range. “The retest is in progress,” he says, as Bitcoin retests the Lower High and Range Low as support.

This shift in momentum has significant implications for the crypto market as a whole. As capital rotation into alts slows down, Bitcoin is poised to regain its command of the total crypto market cap. Whether this marks the beginning of a new upward trend remains to be seen, but one thing is certain – the stage is set for a thrilling ride.

Remember, every investment and trading move involves risk. Always conduct your own research and consider multiple perspectives before making a decision.