Bitcoin (BTC) surged to nearly $26000 during Asian trading on Tuesday, quickly reversing yesterday's decline. BTC climbed from $25210 to $25973 in just 30 minutes (from 3:00 a
Bitcoin (BTC) surged to nearly $26000 during Asian trading on Tuesday, quickly reversing yesterday's decline. BTC climbed from $25210 to $25973 in just 30 minutes (from 3:00 a.m. to 3:30 a.m. World Standard Time), and this recovery was not driven by any specific news event. On the contrary, the dynamics of the Bitcoin futures market have played a crucial role.
Why has Bitcoin prices rebounded?
Famous analyst Skew provided a technical perspective on price trends, calling it "textbook style short squeeze". Through in-depth research on Skew's analysis, he pointed out that there is a significant difference between the cumulative trading volume Delta (CVD) of perpetual contracts (or "perps") and the actual price. In transactions, the deviation between CVD and price may indicate a potential reversal. In this context, although sellers are attempting to lower prices below $25000, CVD indicates that purchasing pressure is increasing.
In addition, the number of short positions in the futures market relative to open positions (OI) is high, and the funding interest rate is negative. A negative funding rate usually means that bears are paying long, indicating bearish sentiment. Despite attempting to lower prices, Bitcoin has returned to a volatile long price level of $25300 and has not been able to maintain a bearish trend in the lower time frame (LTF).
The spot market for immediate delivery of asset trading shows signs of bullish structural changes, with prices gradually rising. Skew believes that the ultimate result of these factors is short selling, where those who short the market (short sellers) are forced to repurchase the market to cover their positions, further pushing up prices.
Skew's analysis essentially emphasizes that although many traders short Bitcoin and have bearish sentiment, the underlying indicators suggest a potential bullish reversal. For traders, the immediate goal after the tightening is to recover $26000.
The Kingfisher provides a more concise statement, implying the squeeze of bears and its impact on those who short Bitcoin: "See around high-level bears. BTC has liquidated them again
Axel Adler Jr. elucidated the broader market sentiment, stating: "Traders do not intend to further decline. Net acceptance increased by 9.79%. This is a new record for long open positions in the past year
Bitcoin Net Acceptance SMA7 Days | Source: X @ AxelAdlerJr
Despite rapid price changes, the margin of short selling is relatively small. According to Coinglas data, approximately $12.32 million in BTC short positions have been cleared. In terms of background, the most significant short liquidation event of the past three months occurred on August 17th, with an amount of $120 million. At that time, BTC briefly fell to $24700 and then quickly recovered above $26600.
The decrease in futures holdings on major exchanges is also relatively small. According to Coinglas' data, open interest contracts decreased from $10.66 billion to $10.65 billion. This small decline indicates that few traders have had to close their positions and the funds interest rate has turned positive, marking a shift in sentiment from bearish to bullish.
As of the time of publication, the BTC price was $25768.
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