- Bitcoin’s price trajectory has once again seen a sharp uptick, breaking above the $28,000 mark for the first time since the significant surge on August 29th.
- As a striking indicator of Bitcoin’s famous volatility, the cryptocurrency experienced a price increase of over $800 in a small 5-minute window on Sunday evening.
- One of the key catalysts behind this dramatic price movement, as highlighted by respected crypto analyst Byzantine General, is a phenomenon known as a “short squeeze.”
Bitcoin price managed to attract attention again with a rapid upward movement: What is behind this rise of Bitcoin?
Bitcoin’s Price Hits $28,000: How Did This Happen?
Bitcoin’s price trajectory has once again seen a sharp uptick, breaking above the $28,000 mark for the first time since the significant surge on August 29th. This previous jump was associated with the victory in Grayscale’s Bitcoin Trust (GBTC) conversion-related legal battle with the U.S. Securities and Exchange Commission (SEC).
As a striking indicator of Bitcoin’s famous volatility, Bitcoin experienced a price increase of over $800 in a small 5-minute window on Sunday evening, jumping from $27,250 to $28,053.
One of the main catalysts behind this dramatic price movement, as pointed out by respected crypto analyst Byzantine General, is a phenomenon known as a “short squeeze.” In futures trading, a “short squeeze” is characterized by a rapid increase in the price of an asset, which forces traders who had bet against the asset’s price (short sellers) to buy it to avoid further losses. This buying pressure can cause the asset’s price to rise even further.
During yesterday’s rally, a significant $392 million Bitcoin short position, equivalent to about 7.7% of the total open positions, was rapidly liquidated. Byzantine General humorously noted that Bitcoin’s open positions had quickly increased by $350 million, suggesting the market was willing to repeat such a volatile maneuver: “The entire market was like ‘I’ll do it again.'”
Crypto analyst Fabian D. deepened the analysis by highlighting the complex interaction between short sellers being squeezed out and the potential for further appreciation in Bitcoin’s price. He noted that the next move for Bitcoin depends on two main factors: “the entry of spot buyers driven by fear of missing out (FOMO) and whether short sellers will rebuild their positions.”
Fabian also pointed out the lack of institutional buying activity in the week leading up to this rise, but he emphasized the importance of monitoring premium rates on platforms like Coinbase and CME after the market opens today. Two upcoming events further complicate the market landscape: “expectations for Ethereum Futures ETF entries and the court hearing about the Celsius platform, which has the potential to refocus attention on credit distributions.”
Analyst Maartunn added another layer of optimism by using data from on-chain sources, stating, “Net Taker Volume has crossed into the green zone, indicating buyers are in control.” Maartunn said, “This hasn’t been seen in the last four months.”
CVD and delta data in Bitcoin
Analyzing Bitcoin’s total CVDs and delta data, quant trader Skew shed more light on the dynamics at play on platforms like Binance and Bybit. Specifically, he highlighted that the recent price increase is entirely unpredictable, with a departure from short positions and strong persistent buying as the price approaches the peak.
When looking at Bitcoin’s total CVDs and delta, he added, “Selling pressure is currently only seen on futures markets. The price drop comes with a drop in futures CVD and an increase in futures selling delta. The next move that will affect the entire move is spot.”
Skew emphasized the significance of the Binance Spot market, which offers a notable order book and contains a substantial amount of current and pending liquidity. Such a configuration could lead to more pronounced price reactions. “Increased bid liquidity in spot order books implies that spot buyers need more volume to clear $28K – $29K (Market structure change),” he warned.
Notably, the price action could already be seen on a 1-day chart. As previously explained in recent Bitcoin price analyses, the price had broken the (black) descending trendline formed in mid-July. The successful retest of the descending trendline occurred on Friday and Saturday, confirming bullish momentum, and the expected surge happened yesterday.
