Key Insights:
Bitcoin has crossed the critical resistance at $69k and has been moving towards $70, after which a new ATH could be seen within this week.
A move beyond the $70k level could trigger a short squeeze taking Bitcoin above $73.7k.
Currently, over 96% of BTC holders are in profit with most of them being long-term investors.
Bitcoin Crosses $69k Resistance
Bitcoin's price has finally crossed the $69k resistance and this sends Bitcoin in a short squeeze mode where it may cross $73.7k within this week. This is because the next highest open interest is present in the $70,000 strike price which can be clearly seen in the below.
Bitcoin Open Interest At $70,000 Strike
At any point in time, if Bitcoin crosses $70,000, this strike price will get liquidated and a short squeeze will send Bitcoin towards the next major strike, i.e., towards $75,000. In simple words, if Bitcoin crosses $70,000 in the next two days, we will see a new ATH by the end of this week.
Earlier Bitcoin had reached a local high of $69k after rallying from $62,000 to $69,400 between 14 and 21 October 2024. The top cryptocurrency gained approximately 12% due to increased market activity, significant ETF inflows, and buying by both whales and institutional investors, along with developments from the US Federal Reserve.
Bitcoin Tries To Sustain Above $70k
In the past, Bitcoin has tried several times to cross these levels unsuccessfully, but each time, it could not sustain above $70k. However, this time, it may do so because of the alignment in almost all areas from ETFs, whales, institutions to retail markets.
As the price saw profit booking above $69k, shorter sellers quickly built their positions around that level, and at present, over $1.72 billion worth of shorts are present at the $69k strike price.
Cumulative Shorts at $69k in Bitcoin
If Bitcoin manages to cross these levels, it may trigger a short squeeze that sends Bitcoin beyond $73.7k, its last all-time high.
A short squeeze occurs when bearish traders face huge losses and are forced to liquidate their positions. At this stage, since the number of bullish positions in the market reaches an overwhelming majority, it triggers a quick yet massive rally in crypto prices.
On-chain data from Glassnode and IntoTheBlock show that at this stage, over 87% of Bitcoin holders are in profit. This group includes both short-term and long-term holders.
Percentage of Users Making Profit in Bitcoin
If there had been more short-term holders at this stage, it could have spelled doom for the price, as short-term holders often sell in panic when prices correct after a local high.
Thankfully, the market is currently dominated by long-term investors. Press time data from IntoTheBlock shows that short-term holders only constitute about 4% of the current market, while long and medium-term represents the rest, 96% of the investors.
Holder Composition in Bitcoin
As the derivatives data shows, Bitcoin could only make a new ATH if it decisively breaches $69k this week or the next. For this to happen, the market needs a period of high volatility.
Interestingly, one scenario where this could happen is in the run-up to the US elections. In the last week preceding the elections (on 5 November 2024), markets usually see high volatility.
A volatility-driven rally could easily take Bitcoin above $69k, after which the short squeeze in the markets can drive Bitcoin towards $73.7k, its current ATH.
Bitcoin is likely to sustain above $73.7k if it manages to cross these levels due to multiple reasons.
First, the increased retail adoption of Bitcoin is massive. For the first time in its history, the number of addresses holding Bitcoin has crossed 53.5 million. There is also high user activity in the broader markets, which signals that crypto technology is seeing rapid adoption.
Second, Bitcoin ETFs have been witnessing high inflows on a sustained basis. Most Bitcoin ETFs have rarely seen an outflow in the last eight days. BlackRock has seen an inflow of over $1.5 billion over the last week. Even the least likely candidate, GBTC has seen an inflow of $63 million.
Third, there is high liquidity in the market. This is thanks to the US Fed, whose policy rate cut of 0.5% has triggered inflows into overall crypto markets. Further, the increased liquidity could be effectively channeled into crypto markets through stablecoin minting by Tether, Circle, DAI, and other issuers.
Finally, both whales and retailers have been buying Bitcoin in record numbers. Whales reportedly have never bought Bitcoins as aggressively as they have done in the current markets.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.