Bitcoin price rallied to a 12-month high above $79,000 on Wednesday before pulling back to $78,000 as investors booked profits. However, derivatives data suggest the asset may be building momentum for another move higher.
Summary
- Bitcoin price surged to a 12-month high above $79,000 before retreating amid profit-taking, erasing intraday gains.
- Over $225 million in short liquidations fueled the rally, with analysts attributing the move largely to a short squeeze.
- Rising open interest and negative funding rates signal potential for another short squeeze, with resistance near $85,000 and support at $77,000.
According to data from crypto.news, Bitcoin (BTC) price rallied nearly 6% to a 12-week high of $79,388 on Wednesday before experiencing a sharp reversal to $77,593 on Thursday morning. The asset has since perched back a little higher at $78,227, but with zero net gains over the last 24 hours.
Bitcoin’s uptick on Wednesday came from an easing of investor concerns after U.S. President Donald Trump extended the ceasefire on April 21. The news triggered nearly over $100 million in short liquidations from the derivatives market, which further accelerated the upward price action.
However, Bitcoin price fell back after hitting a high on Thursday as investors began taking profits at these elevated levels.
At the same time, analysts had cautioned that Bitcoin’s recent surge was more of a short squeeze rather than a macro-driven move caused by long-term organic demand.
Rising OI hints at looming short squeeze
Despite that volatility, Bitcoin has managed to return above $78,000 after experiencing over $90 million in short liquidations that have kept the bears on their toes.
Data from CoinGlass suggest that Bitcoin could trigger another short squeeze soon, which could catalyze its next leg higher. Notably, Bitcoin’s weighted funding rate remains in the negative while its open interest has continued rising to $60.95 billion at press time.
Negative funding and rising open interest when prices remain resilient have historically preceded strong recoveries once short sellers were forced to unwind their positions during a short squeeze.
If Bitcoin regains its footing and pushes towards $80,000 again, the rally could extend towards the next major resistance zone at $85,000.
On the contrary, failure to maintain this level could see the price slide back toward local support at $77,000.
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