Bitcoin could test $90,000 after shorts get squeezed, but traders warn leverage is building
Bitcoin has broken out to $86,000, but analysts say the next leg depends on whether spot buyers continue to show up as leverage builds.
Bitcoin pushed to a fresh eight-month high of $86,000 on Monday, extending a rally that forced bearish traders out of their short positions and drew fresh leverage bets back in.
Roughly $750 million in bearish crypto derivative positions were liquidated as bitcoin cleared $82,000, a level that capped prices since August, CoinGlass data shows. When short positions are liquidated, exchanges execute buy orders to close them, adding fuel to an already upward market.
“Bitcoin up 5% this morning due to short perpetual futures contracts being liquidated,” Schwab’s head of crypto research Jim Ferraioli told CoinDesk.
Bitcoin also reclaimed its 50-week moving average, a longer-term trend line that some traders use as a signal for their strategies. Wintermute’s De Maere said this measure of average price acted as resistance during previous bear markets.