A closely watched cryptocurrency strategist claims he sees signs that Bitcoin (BTC) is in the early stages of breaking out of its latest correction.
An analyst going by the pseudonym Credible Crypto told his 417,400 followers on social media site X that Bitcoin trader activity indicates that BTC may be preparing for a short squeeze.
A short squeeze occurs when traders who borrow an asset at a certain price in the hopes of selling it at a lower price to make the difference are forced to buy back the borrowed assets as momentum moves against them, causing further gains.
The trader says he is bullish on Bitcoin as spot market demand is growing and open interest (OI), or the total number of outstanding derivative contracts on the asset, remains unchanged.
“Coinbase spot traders continue to buy, Binance spot sellers are inactive, perpetual CVD (total volume delta) is flat, funding is negative. This is what bull dreams are made of and this is what you want to see for a potential bottom to form.
If Coinbase buyers maintain the pressure and Binance sellers remain inactive, we should continue to rally, eventually leading to a nice short squeeze and a return to growth. Note: Spot price is rising while OI is flat/not rising. This is what healthy growth looks like.”
The trader also shares a chart showing that Bitcoin looks set to rally after briefly falling below the $54,600 support level.
“My newest piece of art.”
Looking at the trader’s chart, he seems to be suggesting that Bitcoin has formed a rejection pattern, where the asset is witnessing a temporary move outside of its trading range. The structure usually signals a sharp reversal when the asset loses momentum to maintain the move.
Based on the trader’s chart, BTC deviated from its range in late August after briefly breaking above its $62,700 resistance, leading to a correction. He now believes BTC will rally after temporarily trading below its $54,600 support.
At the time of writing, Bitcoin is trading at $55,265.
Generated image: DALLE3
