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Bitcoin’s rise above $80,000 and its sustained position there has increased expectations of further upside in the market.
However, the analysis firm believes this rise is unhealthy. According to the firm, the recent BTC rally is not driven by spot demand but by an unstable squeeze of short positions.
The analytics firm noted that market expectations rose as Bitcoin surpassed $80,000, but the rise was unstable. The firm stated that the upward trend was far from healthy, a rally led by the spot market.
According to Wintermute’s analysis, this rise was triggered by a squeeze in short positions rather than spot demand, which makes it unstable.
The company noted that while Bitcoin bull markets are generally supported by spot purchases, the recent surge, in contrast to typical bull markets, has been concentrated in the perpetual futures market.
Wintermute, looking back, highlighted that a large number of short positions were opened as Bitcoin approached $70,000, followed by mandatory liquidations and the closing of these short positions, which then pushed the price higher.
At this point, Wintermute stated that indicators such as open positions, funding rates, and the Relative Strength Index (RSI) suggest there is still room for further upside, indicating a squeeze of short positions. However, the company warned that short-term momentum is fragile and that a significant price correction in Bitcoin could occur if spot buying does not follow the closing of short positions.
Wintermute stated that inflows into spot Bitcoin ETFs, Bitcoin holdings on exchanges at a seven-year low, the US CPI report, and the process of Kevin Warsh’s appointment as Fed chairman will be key variables for market volatility going forward.
However, Wintermute also acknowledged positive long-term trends such as ETF inflows and the decrease in Bitcoin reserves on exchanges.
*This is not investment advice.
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