Traders heavily shorted Bitcoin (BTC) and altcoins as the market broke with the news of inflation. What will happen next?
BTC shorts led to a price increase!
Surprisingly, the crypto market has stepped into bullish territory after the leading crypto. As you follow on Kriptokoin.com, Bitcoin has regained the $19,000 level. Recently, BTC fell below the critical $19k range, which also pulled altcoins back. However, Bitcoin has made an attack in the last 24 hours as high as $19,803. Today, the overall crypto market has turned green for a while. The leading altcoin Ethereum rose as high as $ 1,340 during the day.
According to Santiment data, the overall market growth is mainly due to investors turning to short trades and the increased short liquidation after the release of the US Consumer Price Index (CPI). The data shows that most of the traders prefer to short Bitcoin and other altcoins in hopes of price squeeze in the coming days. Market participants expect price squeezes because the inflation rate exceeds the expected range.
https://twitter.com/santimentfeed/status/1580643703932080128
Meanwhile, Coinglass data confirms the same. It shows that 136,000 investors lost more than $300 million in liquidation of future contracts. Also, with Bitcoin stepping into the $19k area, 88.76% of future liquidations come from short traders.
Earlier this week, market experts warned traders to be prepared for increased volatility before CPI data is released. However, the crypto market surprised everyone by increasing rather than falling after the CPI data. So this shows that the market has fallen enough already and also fueling speculation that Bitcoin has bottomed out.
Is Bitcoin a ‘bear trap’?
The liquidation of over $320 million is accompanied by a grueling 24 hours for crypto traders. BTC climbed to week-highs during the day and gained almost $2,000 within hours. The first crypto bull bulls were mobilized after the US CPI data for September came in better than expected. However, this was short lived. Bitcoin has finally outperformed its pre-CPI levels after stocks described as “the biggest bear trap of 2022”. The popular analyst, nicknamed Stockrocker, shared:
This has to be the biggest bear trap I’ve ever seen. Even I was starting to feel pretty bear.
S&P 500 1-hour candlestick chart / Source: TradingViewThus, Bitcoin sustained volatility and liquidations as the spot price bounced off an established trading range. Popular analytics account On-Chain College noted that purges during a single hour of the day were the highest in more than a month. According to data from Coinglass, total BTC liquidations have risen to $116 million in 24 hours by press time. Cross-crypto liquidations totaled $327 million.
Crypto liquidation chart / Source: CoinglassThus, Bitcoin failed to reclaim $20,000. However, he managed to turn the traders’ perspective to the bullish side. Analyzing chart behavior going back to 2019, Credible Crypto suggests that the signals are there for a long upside break. In this context, the analyst says:
Our last two major impulses were both preceded by about 120 days of relatively low-volatility consolidation before they even started. It was supposed to be boring. It’s part of the process. The more boring it gets, the better for future expansion.
BTC caption chart / Source: Credible Crypto/ Twitter
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