As normal, just as Bitcoin was showing signs that it wanted to retrace to the low-$6,000s, bulls stepped in with force.
The leading cryptocurrency, which traded as low as $6,800 just over 24 hours ago, has surged by 10% in the past hour, rallying from $7,050 to a high of $7,770 in the span of 20 minutes.
A short squeeze is a technical event in markets where short holders are forced out of their positions, creating a cascade of buy orders that creates vertical price action for brief periods of time. The opposite of a short squeeze, a long squeeze, analyses have suggested, is what caused much of the crash on “Black Thursday.”
Bitcoin’s strong performance comes as the S&P 500 has continued to rally higher, tacking on another 1.3% in Thursday’s trading session thus far.
This rally in the equities market comes in spite of the fact that another 4.4 million individuals filed jobless claims, making the five-week pandemic unemployment total around 26 million — over 15% of the entire American workforce.
There’s Still Resistance Overhead
Although today’s price action has been bullish for Bitcoin in that it simply created a higher high on the chart, suggesting the uptrend that formed in the middle of March remains intact, there is some serious resistance overhead.
Both Josh Rager and Scott Melker — two popular cryptocurrency analysts — remarked that there is serious resistance at $7,700-7,800, exactly where the ongoing bull move has found a local top.
Rager accentuated the importance of this tight price band with the below image, which shows that over the course of the eight months or so, the level has acted as both resistance and support on multiple occasions.
The chart also indicates that $7,700 is the beginning of a volume profile block, corroborating the idea that this region is important for Bitcoin.
Even if this level does get broken, though, there remains strong resistance on the upside.
A pseudonymous crypto trader identified earlier this month that the $7,900-8,100 zone is “very interesting,” drawing attention to the fact that in this region exists a large cluster of key technical levels.
These include but are not limited to: the 200-day exponential moving average and simple moving average, the 21-week exponential moving average, an order book resistance (as identified by Rager as well), the 61.8% Fibonacci Retracement, and the volume-weighted average price.
Bitcoin Bulls in Control
Yes, there is this overhead risk, but analysts are convinced that bulls are now in control.
On the technical side of things, a trader recently shared the chart seen below, which depicts that Bitcoin’s price action from the February highs until now has formed a “classic BARR bottom,” which is a textbook chart pattern first discovered by technician Thomas Bulkowski. The BARR bottom is his most accurate chart pattern.
It predicts that by the start of May, as the halving activates, Bitcoin will be trading back near the highs at $10,500. That would mean the cryptocurrency will have to rally nearly 40% in the coming two weeks.
What’s especially notable about this pattern is that it’s the same technical formation that marked the bottom at the end of 2018 and the start of 2019. This historical precedent bodes well for the bull case.
There’s also a confluence of fundamental factors that show Bitcoin could soon erupt higher. Per previous reports from Blockonomi, the U.S. Senate just agreed on a $500 billion coronavirus stimulus package that again proves the fundamental value of a scarce and decentralized currency like BTC.
Also, with Tether’s market capitalization reaching a new all-time high of $7 billion, many say the cryptocurrency could be boosted by the incoming capital from the stablecoin alone.