Bitcoin price soars 400 USD
This creates a self-reinforcing mechanism that can cause sudden price surges. It is possible that this effect has occurred on the BitMEX platform and triggered the upward movement.Other analysts have identified a second possible cause. Matthew Graham, CEO of Sino Global Capital, has suggested on Twitter that Bitcoin’s price increase occurred in response to geopolitical events.
A “short squeeze” is a risk associated with short orders. In a market that is heavily shorted, a single large transaction can trigger a sudden upward pressure. As a result, many traders are forced to sell their short positions. If the price then moves even higher, more shorts are forced to sell their positions or their preset stop-loss levels are reached, forcing them to fill their shorts.
Considering the above data regarding the Bitcoin futures, the short squeeze seems the more plausible theory. Regardless, it remains to be stated that Bitcoin is still in a downtrend and descending channel. In order to create a trend reversal and long-term bullish momentum, BTC needs to break the USD 8,000 mark.
Author: Jake Simmons