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After hovering below its previous support at $7,000 for several hours yesterday, Bitcoin’s bulls were able to generate significant momentum that has allowed BTC to reclaim its position within the $7,000 region, and it appears that this upwards momentum is growing.
This move coincided closely with news regarding a US airstrike on a top Iranian military official, which led both crude oil and gold to surge. Many investors have claimed that BTC’s surge was rooted in this news, although it appears that there is another more technical factor behind this movement.
Narratives Abound as Analysts Attempt to Explained What Caused the Ongoing Bitcoin Rally
At the time of writing, Bitcoin is trading up roughly 5% at its current price of $7,400, which marks a notable climb from its daily lows of $6,800 that were set at the bottom of yesterday’s sell off.
It is important to note that Bitcoin’s sharp surge from these lows did come about shortly after news broke regarding the successful airstrike on one of Iran’s top military officials, although it still remains unclear as to whether or not the two events are truly related.
Scott Melker, a popular cryptocurrency analyst on Twitter, explained in a tweet that he highly doubts that the latest Bitcoin rally is related to growing tensions between the US and Iran, explaining that a narrative is not needed to explain every single $400 movement.
“I seriously doubt Iranians are running home to buy $BTC because of this incident. The notion is somewhat absurd, to be honest. You don’t need a narrative for every $400 move,” he explained.
I seriously doubt Iranians are running home to buy $BTC because of this incident. The notion is somewhat absurd, to be honest. You don’t need a narrative for every $400 move.
— The Wolf Of All Streets (@scottmelker) January 3, 2020
Here’s the Real Reason Behind BTC’s Current Rally
If Bitcoin did consistently perform well during times of heightened tensions between countries, it would confirm that the cryptocurrency has become a safe haven asset.
In spite of this, last night’s rally appears to be caused by a highly orchestrated short squeeze that was triggered by negative funding.
“Orchestrated short squeeze. 25x shorts liq’d off mid range zone and s/r zone. Price retraced with an overshoot of the mid range and 7250 s/r. The first sight of negative funding triggered the hunters. The game continues but the real buyers aren’t present,” CryptoISO, another popular cryptocurrency analyst on Twitter, explained in a recent tweet.
Orchestrated short squeeze.
25x shorts liq’d off mid range zone and s/r zone.
Price retraced with an overshoot of the mid range and 7250 s/r.
The first sight of negative funding triggered the hunters.
The game continues but the real buyers aren’t present.
— CryptoISO (@crypto_iso) January 3, 2020
If this Bitcoin movement is truly just a short squeeze, it will likely be fleeting and followed by further downside, but the possibility remains that this movement will lead some sellers to flip to buyers, thus further perpetuating this movement.
Featured image from Shutterstock.
