Key Takeaways:
- Bitcoin bounced 4.5% on Sep. 12 on a possible short squeeze.
- Macro factors capping Bitcoin’s bullish attempts remain strong.
- Is Bitcoin a BUY after all?
YEREVAN (CoinChapter.com) — Bitcoin price bounced off the $25,000 support with a 4.5% intraday gain on Sep. 12 and reached $26,100 in the European session.
Meanwhile, the bulls shouldn’t celebrate just yet, as the price increase could be a “textbook short squeeze.” In detail, it is a situation in which the price of an asset rises to such an extent that investors who have sold short purchase the asset to limit their losses, causing the price to rise further.
Data from the on-chain resource CoinGlass backed the assumption. It showed total BTC short liquidations stood at just over $15.7 million for Sep. 12 as of 11:00 GMT, while $71 million in BTC longs was liquidated the day prior.
Moreover, the price uptick came after a month-long decline spurred on by several macroeconomic factors. Those factors remain strong enough to stop the bulls in their tracks or even send the alpha crypto on another leg down.
US Inflation and FTX’s $3.1B Crypto Dump FUD
With a market cap north of $500 billion, Bitcoin is vulnerable to unfavorable macroeconomic conditions. The CPI report scheduled for Sep. 13 could be one of them.
As previously reported, the Federal Reserve may receive mixed US inflation data, with markets anticipating core CPI to weaken to 4.3% y/y in August from 4.7% a month prior and headline inflation to rise from 3.2% to 3.5% due to a recent rise in oil prices.
According to Fed Chair Jerome Powell’s Jackson Hole speech on Aug. 25, no pivot is expected from the hawkish policies despite the lowering core inflation rate in the past three months. However, should the upcoming report reflect a cool-off, the Fed could pause its rate hike plans in the next FOMC meeting on Sep. 19-20.
The still-unfolding FTX bankruptcy proceedings could dampen the alpha crypto’s bullish ambitions. The exchange will likely get approval to liquidate its $3.1 billion crypto assets on Sep. 13.
Michael Novogratz’s Galaxy Finance is managing the crypto holdings, and they make the most money the higher they can sell the BTC and other assets. Thus, it’s unlikely that Galaxy will short the token and get rid of it cheaply.
Moreover, the FTX Bitcoin stash amounted to less than $250 million, which is unlikely to influence the markets, considering that most investors would possibly prefer to use opaque over-the-counter (OTC) desks to unload their tokens.
However, the event put additional strain on the markets, raising liquidation FUD, which might arguably be equally damaging.
Bitcoin Fractal Raises Bullish Hopes
Despite the current downtrend and the less-than-favorable macro factors, investors could see the dip as a BUY opportunity. Historically, August and September have proven to be the most “destructive” months for Bitcoin, especially in pre-halving years.
Chartered market technician Adrian Zduńczyk noted that the average loss in September was 6.45%. However, the market recovered afterward, closing October-December with a 50.84% profit.
Zduńczyk also asserted that Bitcoin’s current “doing-nothing” price action is driven by market fear, which some traders could shift to their advantage.
Behavioral biases (loss aversion, regret bias, anchoring, heuristics) gain in strength as the range develops. Longer range => explosive breakout. The more extreme the fear, the better the buying opportunity for contrarians.
said Zduńczyk in a recent thread.
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