A closely watched crypto strategist says he is seeing signals that Bitcoin (BTC) is in the early stages of reversing its latest correction.
Pseudonymous analyst Credible Crypto tells his 417,400 followers on social media platform X that Bitcoin trader activity indicates BTC could be preparing for a short squeeze.
A short squeeze occurs when traders who borrow assets at a certain price in the hope of selling them at a lower price to pocket the difference are forced to buy back the borrowed assets when momentum turns against them. triggering further rallies.
The trader says he is bullish on Bitcoin as spot market demand rises while open interest (OI), or the total number of outstanding derivative contracts for a given asset, remains flat.
“Coinbase spot takers keep buying, Binance spot sellers are inactive, perpetual futures CVD (cumulative volume delta) is flat, funding is negative. This is what bull dreams are made of and exactly what you want to see for a potential bottom formation.
If Coinbase buyers keep the buying pressure high and Binance sellers remain inactive, we should continue to grind, eventually causing a nice short squeeze to the upside. Please note: the price increases with a spot bid while the OI remains the same/does not increase. This is what a healthy increase looks like.”
The trader also shares a chart indicating that Bitcoin appears poised for a surge after briefly dipping below the $54,600 support.
“My latest work of art.”
Looking at the trader’s chart, he seems to suggest that Bitcoin has formed an anomaly pattern, where an asset witnesses a temporary move outside its trading range. The structure typically signals an abrupt reversal when the asset loses momentum to sustain the movement.
Based on the trader’s chart, BTC deviated from its range in late August after briefly breaking above its resistance at $62,700, triggering a correction. Now he believes BTC will recover after temporarily trading below its support at $54,600.
At the time of writing, Bitcoin is trading at $55,265.
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Generated image: DALLE3