Bitcoin looks like it will end the week with a 15% price increase and all but four of the top 100 cryptocurrencies by market capitalization are still showing green. Investors are demonstrating increased confidence illustrated by trading volumes.
Experts have shared their predictions and explanations for the increase, which may well indicate a recovery for the cryptocurrency market after months of trepidation.
Thursday’s sudden price increase for Bitcoin is the result of what experts term a “short squeeze” and it sparked a frenzy of activity in the charts.
“This is what’s known in the markets as a short squeeze. When a lot of people are short on heavy leverage, a small movement up can trigger someone’s stop-loss,” said Mati Greenspan, Senior Market Analyst at eToro. “Keep in mind that when a short position gets closed it actually creates a buy order. After a prolonged period of moving within the range, stop losses start to pile up. And so, even a small movement in the market can trigger a chain reaction of stop losses all at once and lead to a breakout on the charts.”
The following chart from eToro[1] shows the breakout:
The orange and blue dotted lines represent the tight range, between $6500 and $7500, that bitcoin has been trading in for the past two weeks.
“We would normally look for a test of the blue line before moving forward. However, should the excitement start to come back into this market, it might not need to.” Said Greenspan.
“The ratio of short margin trades versus longs has been increasing recently,” said Nick Kirk, quantitative developer and data scientist at Cypher Capital. “Buying volume ticked up today and a lot of these short trades got
