The Bitcoin market has witnessed a massive shakeout of leveraged traders in the past 24 hours, as the price of the leading cryptocurrency surged to a new all-time high above $69,000. According to data from Bybt, a crypto derivatives analytics platform, more than $69 million worth of Bitcoin shorts were liquidated in the last day, with the majority of them occurring in the span of a few hours.
What caused this short squeeze? There are several factors that contributed to the bullish momentum of Bitcoin, including:
The anticipation of the first Bitcoin futures exchange-traded fund (ETF) in the US, which is expected to launch this week. The ETF, sponsored by ProShares, will track the performance of Bitcoin futures contracts on the Chicago Mercantile Exchange (CME), and will provide a more accessible and regulated way for investors to gain exposure to Bitcoin.
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The positive sentiment from institutional investors and corporations, who have been increasing their adoption and endorsement of Bitcoin as a store of value and a hedge against inflation. For example, PayPal announced that it will allow its users in the UK to buy, sell and hold Bitcoin and other cryptocurrencies on its platform, following its launch in the US last year.
Moreover, EX Twitter founder Jack Dorsey revealed that his other company, Square, is building a Bitcoin-focused decentralized exchange, which will enable users to swap fiat and crypto assets without intermediaries.
The technical strength of the Bitcoin chart, which showed a clear breakout of the previous resistance level at $67,000, and a confirmation of the uptrend with higher highs and higher lows. The next major target for Bitcoin bulls is the psychological level of $70,000, which could trigger more FOMO (fear of missing out) buying and further liquidations of short positions.
How to trade Bitcoin in this volatile market? While the current rally of Bitcoin is impressive and exciting, it also comes with high risks and challenges for traders who want to capitalize on the price movements. Here are some tips and strategies to consider:
Use proper risk management. Trading with leverage can amplify your profits, but also your losses. Therefore, it is crucial to use stop-loss orders, limit orders, and take-profit orders to protect your capital and lock in your gains. You should also avoid risking more than you can afford to lose and diversify your portfolio with other assets and markets.
Follow the trend. The trend is your friend, until it ends. Right now, the trend of Bitcoin is clearly bullish, so it makes sense to look for long opportunities rather than short ones. You can use trend indicators, such as moving averages, trend lines, and chart patterns, to identify the direction and strength of the trend, and trade accordingly.
Be flexible and adaptable. The crypto market is dynamic and unpredictable, so you need to be ready to adjust your strategy and tactics according to the changing conditions. You should also keep an eye on the news and events that could impact the price of Bitcoin, such as regulatory developments, network upgrades, security breaches, etc. By staying informed and alert, you can avoid potential pitfalls and take advantage of emerging opportunities.