Ki Young Ju, CEO of South Korea-based on-chain analytics company CryptoQuant, has predicted that Bitcoin could soon see a massive short squeeze.
He notes that many traders kept accumulating short positions in late 2020 in the $10,000-$20,000 only to be wiped out later.
Short liquidations accounted for roughly 10% of hourly buy market orders, according to June. Such a scenario could play out now, giving Bitcoin a short in the arm.
Don’t get too excited
The fact that Bitcoin could potentially experience another significant short squeeze doesn’t mean that a new bullish cycle is about to start, according to Ju.
However, it does indicate that the cryptocurrency is close to bottoming out. Last month, Bitcoin dipped to as low as $17,600 before seeing a mild relief rally.
Bitcoin remains in limbo
On July 13, the largest cryptocurrency managed to reclaim the $20,000 level, but market sentiment remains overwhelmingly bearish.
The “Fear and Greed Index” remains in the “extreme fear” territory, according to the most recent update.
A recent Bloomberg survey showed that most retail and institutional investors expected the largest cryptocurrency to plunge to as low as $10,000.
Some analysts believe that the Fed’s increasingly hawkish monetary policy. The central bank is now highly likely to announce a 100-basis point hike after the most recent inflation data.
The top cryptocurrency is currently trading at $20,538 on the Binance exchange.