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A comedown for U.S. dollar strength provides the fuel for a short squeeze in Bitcoin liquidating over $60 million of shorts.
Bitcoin (BTC) bounced past $20,000 on Sept. 9 as a much-anticipated “short squeeze” took hold.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
Trader: BTC could go to $25,000
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD adding as much as $2,700 (8.7%) in hours on the day, reaching its highest since Aug. 26.
After weeks of ranging punctuated with successive moves to the downside, Bitcoin thus finally gave bulls what they wanted.
For popular trading Twitter account Il Capo of Crypto, the upside still had potential to continue at the time of writing, with BTC price action eyeing $21,000.
“Bears very weak here, imo it keeps going up soon,” he forecast.
Il Capo of Crypto had long predicted a relief bounce taking Bitcoin to around $23,000 before a resumption of the downside trend.
“Crucial for Bitcoin is to flip the $20K area,” Michaël van de Poppe, CEO and founder of trading firm Eight, agreed.
“If that happens, $23–$25K seems next.”
Bitcoin short liquidations across exchanges tracked by on-chain monitoring resource Coinglass totaled $64 million for Sept. 9, matching the tally from Aug. 11.
BTC liquidations chart. Source: Coinglass
DXY "parabolic expansion" sees test
The move coincided with a marked correction in U.S. dollar strength more broadly, this coming on the back of a giant benchmark interest rate hike from the European Central Bank (ECB).
Related: Bitcoin price hits 10-week low amid 'painful' US dollar rally warning
Previously at twenty-year highs, the U.S. dollar index (DXY) shed a full percentage point to circle 108.6 at the time of writing.
$DXY Parabolic Expansion
107.70 is the 50% retrace fib level from the last swing low. This is the level that will either be the next higher low for continued parabolic expansion, or if we fall below it, will signal that the trend is losing momentum.#Bitcoin pic.twitter.com/skkv3KKRhp— Kevin Svenson (@KevinSvenson_) September 8, 2022
Analysts had often argued that the fate of crypto markets rests with moves in DXY, which remain unpredictable as the Federal Reserve prepares a fresh rate hike next week.
“Bitcoin inverted chart resembles DXY back in 2021,” trader Hamza noted.
U.S. dollar index (DXY) 1-day candle chart. Source: TradingView
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.