As a researcher with extensive experience in the cryptocurrency market, I’ve been closely monitoring Bitcoin’s (BTC) recent price action and have identified three key factors that contributed to its significant rally over the past weekend.
Over the last weekend, Bitcoin (BTC) underwent a substantial price rise, surpassing $63,000 – a 5.6% jump from its previous low of around $60,000 on Friday. This sudden surge took place without any significant news events triggering it, prompting extensive discussions and analyses regarding the underlying reasons. In this article, we delve into three potential factors that could have contributed to Bitcoin’s price action over the weekend.
#1 Mysterious Bitcoin Whale Activity
Based on DeFi^2’s (@DefiSquared) observation, an enigmatic trader with a high ranking on Bybit and a prominent position on DeBank has been making sizeable purchases in the Binance perpetual futures market. DeFi^2 pointed out that this entity has executed approximately $450 million worth of buys in blocks of 500 Bitcoin during the market’s least liquid hours following the recent local BTC lows on Friday.
DeFi^2’s assessment raised questions about the whale’s intended tactics, given the upcoming Mt. Gox distribution that could potentially impact Bitcoin’s market conditions and volatility. The speaker added, “I wonder what the ultimate goal is just before the commencement of Mt Gox distribution. With such a significant position, they would either need to push the market up high enough to trigger a short squeeze or face the risk of a large-scale collapse if the market moves against them.”
#2 Open Interest Build Up
Expert: Daan Crypto, identified as @DaanCrypto on Twitter, offered valuable perspectives on how the futures market influenced Bitcoin’s price fluctuations. He zeroed in on the connection between open interest and market price, an essential gauge of investor sentiment and impending market turbulence.
In the recent upward trend, Open Interest has predominantly increased with occasional small short squeezes and periods of long profit taking. I believe there are significant short positions from around the $60K mark that will be forced to cover if the price continues to climb. The $65K level remains a crucial area to monitor closely.
As an analyst, I’ve noticed an intriguing development in the Bitcoin market: open interest grew from $30.97 billion on Saturday to $32.21 billion by Monday, according to Coinglass data. However, despite this rise in open interest, there were no significant short squeezes over the weekend. The relatively minor liquidation of $35 million in BTC shorts during this period was noteworthy as it fell far short of past events, such as the price surge from $66,000 to $71,500 on May 20 which resulted in a substantial short squeeze with $84.2 million in short liquidations.
#3 Technical Breakout
As a cryptocurrency analyst, I believe another significant factor contributing to the recent market shift was a technical breakout for Bitcoin. This event, described as “beauty of a breakout” by popular crypto analyst CRG (@MacroCRG), is typically preceded by flat funding rates and a stable perpetual futures basis. These indicators suggest that strong market momentum is on the horizon.
He expressed admiration for the impressive price breakout. The funding rate and perpetual swap spread remained stable. The first-half weekly closing and large pinbar on the weekly chart, featuring an 8% wick, indicated a high likelihood of a reversal. He was fully committed to this trade.
According to technical analysis, Bitcoin has shattered the downward trendline that had persisted since its peak around $72,000 in early June, as indicated on the 4-hour Binance chart by CRG. This breach could signal a possible shift from the current bearish market trend.
Additionally, a large pinbar candle appearing on Bitcoin’s weekly closing price could signify a strong bullish indication, with its long wick extending by around 8%, suggesting the possibility of further price increases.
At press time, BTC traded at $63,232.
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2024-07-01 11:10