Bitcoin and the aggregated crypto markets have been caught within a firm bout of sideways trading since this past Saturday, with this lack of decisive momentum making it incredibly unclear as to where the markets will head next.
In spite of this, Bitcoin has been able to hold above multiple key levels, leading some analysts to question why many traders are so keen to short the cryptocurrency.
It is important to note that a sustained hold above these levels could mean that a rally back towards BTC’s local highs is imminent, and the massive amount of current short positions could fuel this movement if they get squeezed.
Bitcoin Bulls Defend Key Support; Is a Short Squeeze Imminent?
At the time of writing, Bitcoin is trading up marginally at its current price of $8,660, which marks a notable climb from its recent lows of $8,400 that were set yesterday during a sharp downwards movement that was almost instantly reversed by intense buying pressure.
Bull’s ability to guard against a drop towards the lower-$8,000 region is certainly a bullish sign, and the cryptocurrency has now bounced at roughly $8,500 on multiple occasions since it dropped from its highs of $9,200 this past Saturday.
The critical level that bulls need to break above in the near-term does appear to be BTC’s local highs of $9,200, as Jonny Moe – a popular crypto analyst on Twitter, noted that a break above this level could lead it all the way to $14,000 before it finds any significant resistance.
“If we make another local high my money is on a $14k retest,” he explained.
If we make another local high my money is on a $14k retest. $BTC
— Jonny Moe (@JonnyMoeTrades) January 22, 2020
This potential rally up to these highs could be driven by a massive short squeeze that comes after sellers grow overleveraged.
Cantering Clark, another popular cryptocurrency analyst on Twitter, explained in a tweet that he believes that some traders could be overly eager to enter short positions on the cryptocurrency, as it has been able to maintain above multiple key levels.
“I’m not sure why many are so keen about looking for shorts right now. Bitcoin is staying bid above some good levels. Sure that can change, but doesn’t it make sense to weigh bias based on something concrete first? Some of you sound like you have it out for bitcoin,” he explained.
I'm not sure why many are so keen about looking for shorts right now.
Bitcoin is staying bid above some good levels. Sure that can change, but doesn't it make sense to weigh bias based on something concrete first?
Some of you sound like you have it out for bitcoin.
— Cantering Clark (@CanteringClark) January 22, 2020
If Bitcoin continues holding above these key levels in the near-term and bulls attempt to catalyze some upwards momentum, the crypto could soon see a notable rally that allows it to set fresh local highs.