Bitcoin's Bullish Momentum Continues, Potential Gamma Squeeze Looms
Summary:
Bitcoin's bullish momentum continues for the third week, pushing towards $35,000, the highest so far this year. Key markers, including a golden cross forming in averages and liquid charts, suggest a potential short squeeze in the $36,300 to $40,000 range. Additionally, a shift in investor sentiments and strategies is noted in the options market. Short-term indicators watch for price changes propelling a rapid increase in spot buying volumes due to pressure on shorts. Galaxy's research head Alex Thorn suggests potential recurrence of past week's gamma squeeze if BTC/USD hovers around $35,750 to $36,000. This does not serve as investment advice.
Bitcoin (BTC) continues to demonstrate strong bullish momentum in its third week, closing in on the $35,000 mark, the highest its been this year. This momentum is reinforced by a few key indicators including the intersection - termed a golden cross - between the 50-day and 200-day moving average. Additionally, liquidity charts from DecenTrader and Kingfisher point to the possibility of a short squeeze in the price range of $36,300 to $40,000 should Bitcoin manage to surpass the $36,300 price point.
Evidence from the options market also signals a shift in investor sentiments and strategies. Data indicates an alignment with the expectation of a further increase in Bitcoin prices and suggests the continuance of the gamma impact witnessed last week when BTC prices surged to reach $35,280. The indications also suggest a potential gamma event in the price range of $35,000 to $40,000, followed by an according shift in investor positioning. The last week saw a spike in daily option volumes across the derivatives market as noted by Joe Kruy, host of The Big Picture podcast.
Kelly Greer, Head of America Sales at Galaxy further elaborated on the Bitcoin options market, stating that the market flow mirrors different dynamics in the market space. This includes growing interest month by month from Q3 to Q4, high interest in highlighted calls, and evolving interest in upwards price movements now that volatility is higher and calls are slightly elevated.
From a technical perspective, traders are closely monitoring the bull pennant pattern on the daily timeframe in conjunction with the emergence of a golden cross. In the short term, the main factor to watch out for is whether a price hike to $36,300 will put pressure on shorts and whether this will provoke a swift rise in spot buying volumes caused by options and futures traders covering their positions or facing potential liquidation. This would ultimately result in short liquidations as spot volumes hit their peak.
Alex Thorn, Head of Firmwide Research at Galaxy, suggested that last week's Bitcoin gamma squeeze could repeat if BTC/USD prices rise to between $35,750 - $36,000. Thorn explains that a 1% increase in upward movement would prompt options dealers to buy $20 million in spot BTC. This could further escalate the situation if prices begin moving towards these levels. Please note that this news piece does not include investment advice or recommendations, and every investment and trading move is risky. Readers are advised to carry out their own research before making any decisions.
Published At
10/30/2023 4:52:09 PM
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