Bitcoin is recovering but still below key liquidation levels. A break above $74,000 could trigger a short squeeze to $100,000
All eyes are on Bitcoin, and for good reasons.
Bitcoin is the most valuable, commanding a market cap of over $1.3 trillion, translating to a whopping 56% of the market share.
Surprisingly, despite the rise of high-quality altcoins and the proliferation of meme coins, Bitcoin continues to command a higher market share.
It could be because of institutional adoption. However, a big deal is with its universal endorsement and the belief that BTC is, after all, a better version of fiat.
When you spend 3 hours listening to Musk & Trump, but they don't mention Bitcoin:pic.twitter.com/VGid88NT4p
— Lark Davis (@TheCryptoLark) August 13, 2024
Institutions and governments have endorsed Bitcoin via spot ETFs, and now, the United States is all in on crypto.
Traders Are Upbeat, A Short Squeeze Expected If Bulls Clear $74,000
The combination of these factors explains the bullish sentiment and the masses’ expectations that the coin will fly in the coming days.
Looking at the daily chart, Bitcoin is changing hands at around $60,000.
The immediate support is at August lows at around $50,000.
(BTCUSDT)
Conversely, the sell wall is around the $66,000 and $70,000 zone.
According to trading data by one analyst on X, there will be more room for growth if Bitcoin breaks above the $72,000 and $74,000 levels.
Of note, this zone marks a vital resistance and is crucial as far as Bitcoin is concerned.
(Source)
Since the uptick to all-time highs, bulls have failed to break above $72,000.
In July, prices recoiled sharply from around this area before plunging violently to $50,000.
Now, citing trading data from Binance, one analyst believes that if Bitcoin prices pierce $72,000 and reclaim $74,000, billions of dollars of leveraged shorts will be liquidated.
The event will be similar to the liquidation seen when Bitcoin plunged to below $50,000 in early August.
However, in a short squeeze, once BTC floats above $74,000, leveraged traders who have been forced out will have to buy back their positions at a higher price, fueling the uptrend.
When this happened, one trader believed BTC would rapidly rally to $100,000.
While bullish, only time will tell whether bulls have what it takes to breach $70,000–a round number.
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Why The Fear Behind Bitcoin Price Action?
Sentiment data shows that traders are gripped in “extreme fear.”
This sentiment is surprising, considering that BTC is around 20% of the all-time high, and prices have not crashed as typically seen in bear markets.
(Source)
In the last bear cycles, extreme fear was evident after prices plunged by over 60% from all-time highs.
The result often sees massive liquidations and shakeouts, purging the market of speculators fond of using high leverage.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
