Bitcoin has surged 15% in two weeks, nearing a $3.1 billion short interest at $100k. Analysts predict a potential short squeeze could push Bitcoin to new highs, possibly over $120,000. Institutional interest in Bitcoin ETFs has surged, but caution over potential profit-taking exists too.
Bitcoin has seen a solid climb recently, posting a 15% increase in the past two weeks. This uptick is drawing significant interest from high-profile investors. However, there are concerns that profit-taking could hinder this rally, possibly capping the upswing in Bitcoin’s price.
Currently, Bitcoin is edging closer to a significant tipping point, as it nears a massive short interest of approximately $3.1 billion concentrated around the $100,000 mark. This figure is crucial, as it hovers just above Bitcoin’s recent high of $97,000. A breakout past that $100,000 threshold could trigger a short squeeze, where short sellers, who bet against Bitcoin, are forced to cover their positions by buying back at higher prices, thereby pushing the price further up.
Historically, a similar scenario unfolded last November when Bitcoin soared to $76,000, running into a cluster of shorts valued at $1 billion. The ensuing squeeze propelled Bitcoin up to $81,000 and culminated in a peak of $108,000 by December. Such patterns have investors eagerly anticipating a repeat performance.
In the backdrop of this potential rally, Bitcoin’s recent performance comes amid a backdrop of hopeful investor sentiment. Analysts have noted a growing disconnect between Bitcoin and traditional risk assets, particularly US tech stocks, which is a shift that could increase institutional interest. Robbie Mitchnick from BlackRock commented that should Bitcoin break its tight correlations with the stock market, it will garner more attention from investors.
Analysts at Bernstein have stated it’s tough to take a bearish stance on Bitcoin right now. Standard Chartered’s Geoff Kendrick increased his forecast, predicting Bitcoin could surpass $120,000 soon. He noted that a shift from gold investments toward Bitcoin could further drive the price surge.
Interestingly, Arthur Hayes, chief investment officer at Maelstrom, believes Bitcoin has bottomed out at $74,500 and is now in what he terms an “up-only” period, suggesting it could reach as high as $200,000 within the year.
Institutional interest in Bitcoin is reportedly heating up as well, particularly via spot Bitcoin exchange-traded funds (ETFs). Recent data from UK-based Farside Investors indicated that over $4 billion flowed into Bitcoin ETFs in the US in just two weeks – a strong indicator of renewed investor appetite. Samara Cohen, from BlackRock, noted that institutional focus is largely on Bitcoin, which aligns with their successful Bitcoin ETF boasting $58 billion in managed assets.
Nevertheless, caution remains on the table. Some analysts warn of weakening demand, with signs of buyer fatigue and profit-taking surfacing in the market. According to data from Glassnode, the selling pressure is currently eclipsing demand, suggesting that while optimism abounds, not all is well in Bitcoin’s market.
As Bitcoin remains poised for possible explosive growth, the dynamics of short positions and investor behaviour will likely dictate the near-term future of its price.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent covering DeFi and technology. He is reachable at [email protected] for any tips or insights.
