The latest surge in the price of Bitcoin (BTC), which saw the market’s premier cryptocurrency record a rally that took it all the way up to around $30,000, resulted in the liquidation of several million short positions.
Indeed, in the past two days, $107 million worth of short Bitcoin futures positions have been liquidated on major exchanges, according to the crypto derivatives analytics website. CoinGlass.
About $60 million in short positions were liquidated in the day on Tuesday, the highest daily tally since March 16.
A separate chart presented by CoinGlass shows bulls taking over when it comes to Bitcoin futures leverage demand.
Bitcoin futures leveraged funding rate recently increased to 0.03% on decentralized crypto derivatives exchange dYdXits highest level since the end of March.
A positive funding rate means that traders opening leveraged long positions are paying funding to those opening short positions, indicating a higher level of demand for the latter position rather than the former.
Bitcoin options markets are also indicating a bullish trend.
According to data presented by The Block, the delta skew 25% of Bitcoin options expiring in 7, 30, 60, 90 and 180 days are all above zero and not far below their year highs.
A bias greater than zero suggests that investors are paying a premium for bullish calls over traders taking the opposite position.
Price levels to watch for Bitcoin
Bitcoin’s latest price rally appears to have been catalyzed by short-term technical developments, including the recent formation of a pennant structure.
Other technical indicators such as 1) the fact that BTC had continuously found support at its 21-day moving average, 2) all major moving averages are increasing in ascending order, 3) the recent strong rebound from the 200DMA in mid-March and 4) the “golden cross” in early February contributed to the increase in the price of BTC.
As the risk of profit taking rises following the 14-day Relative Strength Index (RSI) surge back into overbought territory, the bulls will now have their sights set on the next price target in the 32,500 area. $.
These are the late May 2022 highs and also roughly coincide with the January 2022 lows.
Will macro events play spoilsport?
The excellent performance of Bitcoin this beginning of the week precedes the publication of several key data from the American economy on Wednesday, Thursday and Friday.
These include the latest consumer and producer price index reports, the latest retail sales report and the preliminary version of the April consumer sentiment survey from the University of Michigan.
These data releases, alongside Wednesday’s release of the minutes of the latest FOMC meeting (Federal Open Market Committee) policy makers in the Federal Reserve Bank (FED), could significantly alter expectations for US growth and the outlook for a Fed interest rate hike.
This could have a huge impact on crypto market prices.
If this week’s data contradicts expectations that the FED will begin a rate-cutting cycle later this year (i.e. if inflation data is higher than expected and other data reveal that the US consumer is still in good shape), this could push the US dollar and US yields higher and weigh on Bitcoin, potentially sending it back sharply below $30,000.
On the other hand, if this week’s data shows that 1) inflation continues to decline rapidly and 2) a US recession later this year is becoming increasingly likely, that could support Bitcoin, if that triggers further weakness in the US dollar and yields.
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