Those betting on further downside begin to see setbacks as Bitcoin starts the Wall Street trading week with a spike higher.
Bitcoin (BTC) regained some lost ground at the Aug. 29 Wall Street open amid talk of an imminent short squeeze.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
Shorts lose out in modest squeeze higher for BTC
The move signaled welcome relief for hodlers, who had looked on as the pair dove increasingly below $20,000 during the weekend.
Now, with the market “aggressively short positioned,” conditions appeared to favor a further relief bounce to burn those nursing short trades.
Looks like we’re doing a little bearbecue. https://t.co/smRfCWC2C0
— Byzantine General (@ByzGeneral) August 29, 2022
“You know what is next,” popular Twitter account Il Capo of Crypto warned, reinforcing his belief that the bounce would be followed by a deeper retracement.
Short squeeze https://t.co/D8rNtSVwsl
— il Capo Of Crypto (@CryptoCapo_) August 29, 2022
Data from on-chain monitoring resource Coinglass meanwhile showed liquidations beginning to mount at the time of writing, with combined cross-crypto liquidations at $166 million in 24 hours.
U.S. stocks themselves opened slightly in the red, while the U.S. dollar index (DXY), having earlier put in a new twenty-year high, began retargeting its peak after a prior retracement.
U.S. stock markets are opening red, while the $DXY shows some weakness today.
Wouldn’t expect much further downside on risk-on assets and expect a slight bounce through the day.
— Michaël van de Poppe (@CryptoMichNL) August 29, 2022
“$DXY could be nearing its macro top similar way Bitcoin has in April 2021,” trader JACKIS summarized.
“Many bearish divergences seen on the Daily chart is defo something to keep an eye on. The moment DXY tops is the moment major assets print the macro bottom.”U.S. dollar index (DXY) 1-hour candle chart. Source: TradingView
“Hard to get too excited”
Zooming out, the mood among analysts remained lackluster in the face of ongoing macro turmoil.
After last week’s Federal Reserve comments removed any hope of a policy pivot, stocks had little impetus for optimism as quantitative tightening, known as QT, looked set to continue.
“It’s hard to get too excited about $BTC and major pump pumps when the SPX looks like this,” trader and analyst Josh Rager concluded on the day.
“There are going to be outlier assets that outperform and still pump in this bearish environment. But overall, outside of those tokens it’s hard to want to go heavy with equities downtrend.”
Atcoins meanwhile offered mixed progress as Bitcoin gained, with Ether (ETH) leading the top ten cryptocurrencies by market cap.
ETH/USD traded up around 6% on the day at the time of writing, passing $1,500.
ETH/USD 1-hour candle chart (Binance). Source: TradingView
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