Bitcoin price is back above $4000. It might not seem like much compared to its recent losses. After falling more than 36% in a single week the BTC/USD price has managed to rally up from a low of $3684 to a recent high of $4447, a 20% increase all in all.
The last few weeks have been particularly bearish with any bullish price action being swiftly contained to less than 10% and swiftly gobbled up by sellers and short-sellers alike.
Technically, the Relative Strenght Index (RSI) on BTC/USD has started to rebound after reaching historic lows of 10.30, as of press time it has been creeping back up to 30 which is still considerably oversold. Additional potential upside is yet to be had should the bulls continue their buying pressure. Finally, A break above $4520 could trigger an avalanche of buying as short sellers scramble to cover their short positions which could rally the price even higher. At that point, an additional $400-500 increase would not be out of the question.
Potential Short Squeeze?
Although most traditional technical indicators are pointing to extremely oversold conditions for Bitcoin, most bears seem to have no qualms increasing selling pressure by adding to their short positions on every minuscule low volume price jump, no matter how small. This is evident by the ever-increasing margin short positions on Bitfinex and despite the recent +20% price increase does not seem to deter the persistent bears. The BTCUSDSHORTS remain close to their all-time highs and only time will tell if this will be the catalyst to push Bitcoin price further along to its road to ATH’s.
Is The Bitcoin Bottom In?
It’s too early to call a bottom just yet. Bearish targets remain at $3000-$2600 which would coincide with the weekly 200 Moving-Average (SMA). Not unreasonable by any means if you believe in following the path of least resistance. Right now, it appears that calling a market bottom would be considered more than short-sighted. Until we have further bullish confirmation we must assume further downside is on the cards.