Market Gets Cozy With Bitcoin? Why BTC Is Set For A Short Squeeze

Bitcoin is still rangebound, trading at $48,747. It has made 1.1% profit over the past day. Bitcoin, the market’s first crypto, has failed to cross the $45,500 to $59,500 channel within the past seven days. However, there are a few factors that could cause volatility to increase soon.

Bitcoin BTC BTCUSD Santa
BTC moves sideways on the 4-hour chart Source: BTCUSD Tradingview

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NewsBTC reports on the possible short squeeze of Bitcoin. Most likely, the recent price movement was due to the post-crash market needing time for a range and institutions de-risking their positions.

Large players are now potentially sitting in big piles of cash and looking to front-run Bitcoin’s next trend. Due to the large number of options expiring just before 2022, this move is likely to occur at the end December.

QCP Capital, an investment firm is among the most prominent. defendersBTC’s short squeeze thesis. During the past weeks, the firm has only seen their conviction on this theory strengthen as market participants continue to trade Bitcoin’s current channel.

QCP Capital made these comments due to an increase in options and decreased liquidity over the holidays.

Our view is that liquidity will thin out over the holiday season and into 2022, leading to a squeeze. Owning wings (or far strikes options) could prove very lucrative if this occurs.

Bitcoin to Break $100K in Q1 2022

Other experts agree with QCP Capital’s thesis, such as the CEO and CIO at Three Arrows Capital Zhu Su. Admitting that he has “not owned this much” Bitcoin since Q4, 2020, before the cryptocurrency rally into $60,000, Su claimed “conditions for gamma squeeze are potent”.

When asked what the potential targets for Bitcoin in the next months and a short squeeze scenario are, and whether BTC’s price will be able to replicate last year 3x rally from $20,000 to $60,000, Zhu Su replied:

Given current mcaps, 3x seems harder. It’s possible to achieve 45-90 in the next weeks. Then, 135 is available for q1 and q2.

Read Related Reading| Bitcoin Drops To $46k As $44.2 Million In BTC Gets Dumped Within 1 Min

If volatility break in favor of the bulls in the days after Christmas as a result of a Santa Rally, as our Editorial Director Tony Spilotro wrote, traders could be looking at “an indicator for what may happen in the coming year”. BTC will therefore be able to predict the outcome of the following day.

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