In the world of cryptocurrency, Bitcoin’s remarkable rally, which saw it soar from $34,493 to a year-to-date peak, is showing remarkable resilience as it approaches the $35,000 mark for the third consecutive week.
Several key factors underpin this ongoing bullish momentum:
1. Golden Cross Formation: A significant technical indicator on the daily chart reveals the formation of a golden cross between the 50-day moving average and the 200-day moving average. This is often seen as a bullish signal by traders and investors.
2. Liquidity Maps Insights: DecenTrader and Kingfisher liquidity maps point to the potential for a short squeeze in the range between $36,300 and $40,000. This possibility hinges on Bitcoin’s price successfully breaching the $36,300 level.
3. Options Market Shift: Data from the options market suggests a noteworthy shift in investor sentiment and positioning. This data aligns with the perspective that Bitcoin’s price may have more room to climb. The data also hints at the potential for a gamma event, with BTC rallying to $35,280. Additionally, it suggests the possibility of another gamma event in the $35,000 to $40,000 range, with investor positioning adapting accordingly.
Over the past week, daily options trading volumes across cryptocurrency derivatives markets have surged. This surge in options activity is underscored by the remark by Joe Kruy, host of The Big Picture podcast, who noted that Paradigm had its best day ever, with a volume increase of 70%.
Kelly Greer, head of America sales at Galaxy, commented on the Bitcoin options market, highlighting the increased interest in call options and the dynamics of short gamma. Galaxy’s observations in early October have manifested in the market as Bitcoin broke out of its range and settled in the mid-thirties.
From a technical analysis perspective, traders are closely monitoring the formation of a bull pennant pattern on the daily timeframe, coupled with the emergence of a golden cross.
In the short term, attention is focused on whether a move beyond the $36,300 level will exert pressure on short positions, potentially triggering a surge in spot buying volumes. This, in turn, could lead to a spike in aggregated short liquidations.
Alex Thorn, head of firmwide research at Galaxy, emphasized the potential for a Bitcoin gamma squeeze, similar to what occurred last week, if BTC/USD advances further to the $35,750 – $36,000 range. This would necessitate options dealers to purchase significant amounts of spot BTC for each percentage increase, potentially leading to a highly dynamic market.
In essence, Bitcoin’s recent performance suggests that the cryptocurrency might be on the cusp of another significant price move, with technical indicators, options market data, and trader sentiment all pointing towards the potential for further upward momentum.