Bitcoin continues to print new all-time highs amid a short squeeze

This week has been boring across many asset classes due to lack of meaningful fundamental developments and rangebound price action. That’s not been the case for bitcoin as the cryptocurrency surged by more than 9% in just the last two days.

I’ve tried to find the catalyst or some kind of fundamental reason behind this rally, but couldn’t find it. Analysts cite the usual stuff like ETF inflows, expected Fed rate cuts and so on. That’s not new information. (Maybe you can share in the comments some NEW information that’s been missed).

This might be more of a technical driven move. As soon as the price broke above the previous all-time high, the momentum increased substantially and the price went parabolic. To me, it looks like a short squeeze.

A short squeeze happens when short sellers are forced to liquidate their positions as the price goes against them and this pushes the price upwards even further. According to the data from Coinglass, more than $1 billion got liquidated in this rally.

Fundamentally, the path of least resistance has been skewed to the upside as I’ve been repeating for a long time given the expansionary fiscal and monetary policies. Technically, I highlighted here the bullish flag that’s been forming and with this breakout we could still see new highs before the US CPI due on Tuesday.

That’s going to be the next test. A hawkish repricing in interest rates expectations triggered by a hot CPI could lead to a
short-term correction, but given that the Fed’s reaction function remains
to either wait more or cut, the market should continue to climb eventually. Soft figures, on the other hand, should support the rally further.

On the daily chart, we can see that we broke out of the bullish flag. The target is generally a projection of the flag
“pole” which in this case would be the rally since April 9 tariff pause.
This would put the target around the $135,000 level, but a more
conservative $125,000 would have higher probabilities.

On the 4 hour chart, we now have a new upward trendline defining the bullish momentum. The buyers will likely lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to target a deeper pullback into the next major trendline around the 106,000 level.

On the 1 hour chart, we can see that the rally went parabolic since yesterday and it’s generally a bad idea chasing such moves as there’s a high risk of entering right before a pullback, especially in the absence of new bullish catalysts. Dip-buyers will continue to look for near-term support levels to keep pushing into new highs, and right now the closest is the minor upward trendline around the 114,000 level.

If the price gets there, we can expect the buyers to pile in to target new highs, while the sellers will look for a break lower to extend the pullback into the next trendline around the 110,000 level.