A closely followed crypto strategist says he’s 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 the social media platform X that Bitcoin trader activity suggests that BTC could be setting up for a short squeeze.
A short squeeze happens when traders who borrow an asset at a certain price in hopes of selling it for lower to pocket the difference are forced to buy back the assets they borrowed as momentum moves against them, triggering further rallies.
The trader says he’s bullish on Bitcoin as spot market demand rises while open interest (OI), or the total number of outstanding derivatives contracts for a given asset, remains flat.
“Coinbase spot takers keep buying, Binance spot sellers are dormant, 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 up and Binance sellers remain dormant, we should keep grinding up ultimately causing a nice short squeeze back to the upside. Note: price rising on a spot bid while OI stays flat/does not increase. This is what a healthy rise looks like.”
Source: Credible Crypto/X
The trader also shares a chart suggesting that Bitcoin looks poised for a surge after briefly plunging below its support at $54,600.
“My newest work of art.”
Source: Credible Crypto/X
Looking at the trader’s chart, he appears to suggest that Bitcoin has formed a deviation pattern, where an asset witnesses a temporary move beyond its trading range. The structure typically signals an abrupt reversal as the asset loses momentum to sustain the move.
Based on the trader’s chart, BTC deviated from its range in late August after briefly piercing above its resistance at $62,700, leading to a correction. Now, he believes BTC will rally after temporarily trading below its support at $54,600.
At time of writing, Bitcoin is trading for $55,265.
Generated Image: DALLE3
