Key Points
- Bitcoin has seen a 4.16% increase over the past 24 hours, with high demand for short trades.
- Analysts predict sideways movement for BTC during Christmas week, followed by a rise in demand for short positions.
Bitcoin’s [BTC] value has seen a slight rise in the past day, marking a 4.16% increase. As the festive season approaches, the cryptocurrency is being traded at $98,056.
On Christmas Eve, Bitcoin’s value fluctuated between $93,461 and $99,419. This recent increase has sparked discussions among analysts about Bitcoin’s performance after Christmas.
Predictions for Bitcoin’s Performance
Cryptoquant analyst Traders Oasis predicts that Bitcoin will move sideways during the Christmas week. After this, a distribution movement is expected as the demand for short positions increases.
Trader Oasis suggests that Bitcoin has seen a correction in recent weeks due to a lack of institutional demand. He notes that the Coinbase premium index did not accompany the price rise, leading to a retrace. However, he expects the market to continue rising as the index has entered negative territory.
The analyst’s prediction is supported by funding rates and open interest. The declining funding rate is a positive sign for a bull market, while the rising open interest indicates that investors are opening short trades.
Increased Demand for Short Positions
When investors open short trades, they typically expect prices to drop. However, an increase in demand for short trades could result in a short squeeze as buying pressure increases. This could attract more buyers, creating a self-reinforcing rally.
Over the past three days, the BTC fund flow ratio has increased from 0.084 to 0.137. This suggests that more money is being invested in Bitcoin, a bullish signal that could lead to rising prices due to increased buying pressure.
Additionally, an increase in inflow means more BTC is being moved off exchanges, increasing scarcity. As more traders buy the cryptocurrency, it becomes scarcer, leading to a rise in the stock-to-flow ratio. This could result in higher prices due to increased demand and limited supply.
With the demand for short trades rising, traders could potentially experience a short squeeze. This occurs when the demand for short positions drives prices up. If supply continues to fall while demand remains constant, Bitcoin could potentially reclaim the $100k resistance post-Christmas. However, if the cryptocurrency continues to trade sideways, its price may drop to $96600.