Bitcoin's price movements have been volatile, swinging both up and down on August 22, as analysts suggest the cryptocurrency market is "looking ripe for a short squeeze."
Data from TradingView shows that BTC/USD has been fluctuating within a tight range over the past 24 hours. This comes after a rally spurred by revisions to U.S. employment data and the release of the Federal Reserve’s latest meeting minutes.
However, the rally was short-lived, with Bitcoin dipping to $59,500, which led to the liquidation of late long positions, before rebounding to $61,000. According to CoinGlass, 24-hour total crypto liquidations reached $124 million at the time of writing.
Ask liquidity has been increasing above $62,000, making this level a crucial target for a potential resistance-to-support flip. Popular trader Crypto Feras pointed out that BTC/USD has retested this area five times in the past two weeks. "The more it is tested, the weaker it gets. Logically, less effort is needed to flip it after all these tests,” he noted in a recent post on X (formerly Twitter).
“Flipping it means 64.8-65k is next.”
Despite being stuck in a narrow trading range, Bitcoin is fueling optimism for a significant breakout based on current market conditions. Vetle Lunde, a senior analyst at K33 Research, highlighted the rise in open interest along with persistently low funding rates, which could lead to a "short squeeze." He explained,
"Market conditions are looking ripe for a short squeeze. BTC perps notional open interest has jumped by 30k BTC since August 13, with consistent negative funding rates. Average weekly funding rates have hit their deepest negative since March '23."
Another critical level for Bitcoin is the short-term holder realized price, currently around $65,000. This level represents the average buy-in price of investors holding coins for up to 155 days. In bull markets, this price typically acts as a support, with Bitcoin last dipping below it significantly in August 2023.
As Burakkesmeci, a contributor to CryptoQuant, noted,
"We can say that the 64K - 66K region is a strong resistance level for Bitcoin. When short-term holders start closing their losses and moving into profit, they will likely share their success stories. These stories have the potential to attract new investors to Bitcoin."
