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Could Bitcoin's rally continue with a short squeeze?

GB Market Commentary 21/06/2022

by Marcus Sotiriou

Bitcoin rallied overnight as the S&P 500 futures climbed over 1.5%, but it now faces strong resistance at $21,300 approximately. If Bitcoin can overcome this level, then the next target of $23,500 could be reached as shorts get squeezed. Bitcoin seems primed for more upside relief in the short term as futures funding is starting to get negative on the way up, after being neutral yesterday. This means that the majority of players in the futures market are entering short positions whilst price is rising, which could lead result in a short squeeze.

Current rates of Cryptocurrency - 21/06/22

A short squeeze occurs when the price of a heavily shorted asset begins increasing. Short-sellers may then be forced to purchase shares to cover their positions, hence causing a rapid increase in price and resulting in an upwards spiral.

Many sharp investors have sought the ‘dream set up’ for a short squeeze on the Celsius token, $CEL, which has risen over 100% in the past 24 hours. This is because Celsius withdrawals are frozen, so around 87% of the $CEL token supply is locked in the Celsius Network. This low liquidity means that there’s a lack of the $CEL token for short sellers to buy on the open market to cover their positions.

This rise in $CEL price, despite being a result of market manipulation, could increase investor confidence in the market in the short-term, as Celsius, one of the main contributors to the recent crash, appears to be in less trouble.


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