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Bitcoin stands on the verge of a historic move as it heads towards all-time highs, rising above the $71,000 mark just yesterday. The breakout has sparked optimism among analysts, who expect further rises in the coming weeks as the US election approaches – a period historically marked by increased volatility and market shifts.
Important data from CryptoQuant indicates that open interest has reached $22.6 billion, with half of these positions held by bears. If Bitcoin continues to rise, this setup creates a significant risk of short liquidation, which could accelerate buying pressure as prices rise above $71,000.
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With momentum building, the next few days will determine whether Bitcoin is able to maintain its uptrend or whether the consolidation phase below the all-time high will continue. Investors are watching these price levels closely, as a confirmed breakout could signal new highs for Bitcoin. At the same time, a pause may indicate the need for additional consolidation before a larger move occurs.
Bitcoin bears are in serious trouble
Bitcoin bulls are now at high risk of forced liquidation as a significant level of short position liquidity hovers above the $71,000 threshold. According to senior macro analyst and investor Axel Adler, this scenario could spark a strong rally if short positions start liquidating en masse. Creating momentum that pushes BTC beyond its all-time highs. Adler Share CryptoQuant chart on Xnoting that Bitcoin open interest has risen to $22.6 billion, with half of these positions held by bears.
In his analysis, Adler emphasizes that the current market structure is ripe for significant pressure. “There is no need to hesitate to liquidate short positions to push the price higher,” says Adler, noting that a series of liquidations above $71,000 could serve as a launching pad for Bitcoin, taking it to uncharted price discovery levels. This process, known as a “short squeeze,” occurs when overleveraged short holders are forced to close their positions, triggering large buy orders that drive prices higher.
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If this scenario comes true, Bitcoin will not be the only one to benefit. With BTC leading the market, a rally past the previous highs could signal a new cycle for the entire cryptocurrency space. Altcoins typically follow Bitcoin’s lead, and the spillover effect could fuel an overall bull run, with new highs across multiple assets.
Investors are watching closely, as such a move could renew interest and investment in the cryptocurrency market, attracting individual and institutional capital. With BTC on the brink of price discovery, the next few days could be pivotal in shaping the market direction.
BTC Test for Decisive Supply
Bitcoin is testing the supply zone at $71,200, clearing the latest resistance level before reaching an all-time high. The bulls appear to be firmly in control, as price action indicates a possible breach of this level in the coming days. A break and hold above $70,000 remains crucial. This psychologically important level reinforces bullish sentiment, encouraging more buyers to enter the market.
However, a temporary correction of liquidity gathering at low demand levels would benefit Bitcoin’s upside. A drop towards the $69,000 level, or even to $66,500, would still be in line with the bullish outlook. It can attract more interest and create a healthier base for your next hike. These areas will allow Bitcoin to accumulate liquidity before making a stronger push towards new highs.
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Traders are watching, knowing that a sustained move above $71,200 could pave the way for price discovery beyond all-time highs. A successful breakout could spark renewed momentum across the market, triggering a broader bullish wave with Bitcoin leading the charge.
Featured image by Dall-E, chart from TradingView
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