Bitcoin analysts expect a little squeeze

“For the first time in many weeks we are seeing bullish signs here and expect Bitcoin to head towards the upper end of the $30,000-$40,000 range,” wrote Pankaj Balani, CEO of Delta Exchange, in an email to CoinDesk. Upside momentum is improving, which could keep crypto buyers active into the weekend. Some analysts expect a short-squeeze to push bitcoin above the 50-day moving average around $34,000 given oversold conditions on the charts. 

Related: Bitcoin’s Big Institutional Week: JPMorgan Brings Crypto to All Wealth Management Clients & More

Latest Prices

Cryptocurrencies:

Bitcoin (BTC) $32324.8, -0.05%Ether (ETH) $2026.5, -0.13%

Traditional markets:

S&P 500: 4411.8, +1.01%Gold: $1801, -0.32%10-year Treasury yield closed at 1.281%, compared with 1.263% on Thursday

Overall, risk sentiment is improving in traditional and crypto markets as concerns about tighter monetary stimulus wane. On Thursday, the European Central Bank (ECB) pledged to keep interest rates lower for longer and adjusted its policy stance to allow for a slight overshoot of the 2% inflation target. 

“On the options front we have seen a good amount of covering between the $35,000-$40000 strikes for the weekly maturity,” Balani wrote. “For the July expiry there is still decent open interest in the $35,000 strike, which should act as a ceiling for BTC for this month.”

Related: Money Reimagined: Regulate Stablecoins, Don’t Smother Them

The ECB announcement along with a broad decline in global government bond yields contributed to higher stock prices over the past week. Aside from the reach for yield, improving sentiment and positive comments from Tesla CEO Elon Musk on Wednesday kept crypto bulls active.

Story continues

Bitcoin options probability

Bitcoin options traders are pricing an 8% chance of the cryptocurrency rising to a new peak above $64,800 by Dec. 31, according to data source Skew. 

Additionally, six-month implied volatility, or investors’ expectations for price turbulence, has dropped to a more than two-month low of 80% at press time, having peaked at 122% on May 17.

Short-squeeze expected

That implies investors expect the price consolidation to continue for a while, wrote CoinDesk’s Omkar Godbole. 

The chart below shows the bitcoin leverage ratio, which is open interest divided by exchange reserves, reaching the highest level since April. The bitcoin funding rate is slightly negative, which indicates higher short interest than long interest, according to Nakamoto. 

“If BTC retains the lower range of 30K, shorts will begin to squeeze as BTC moves to the middle point of the range, likely accelerating in the coming days/weeks,” wrote Sashimi Nakamoto on CryptoQuant. 

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