Bitcoin indicators, including a bottoming RSI, could trigger a short squeeze if macroeconomic factors align, says crypto analyst Markus Thielen.
According to a crypto analyst, the positive flickering of several of Bitcoin’s most popular trading metrics may necessitate traders to act promptly and liquidate their positions if macroeconomic events are in alignment.
In an Aug. 21 report, 10x Research director of research Markus Thielen stated, “Technical indicators are improving, and there is a possibility of a short squeeze due to the fact that some traders are holding short positions.”
Bitcoin’s relative strength index (RSI) “bottoming out” was one of the key metrics that captured Thielen’s attention as a sign of improvement. The RSI is a metric that measures the speed and change of its price movements to identify overbought or oversold conditions.
Bitbo data indicates that Bitcoin‘s RSI score is presently 61.13, which is 8% lower than its July 21 peak.
Thielen clarified that the “market went down” on Aug. 5, which is also indicated by the negative funding rate, indicates “more short positioning” due to the increase in Bitcoin Open Interest (OI), which is the total number of Bitcoin futures contracts that have yet to be settled or expire.
According to CoinGlass data, OI has increased by 13.62% since August 6, the day after Bitcoin experienced its first decline below $50,000 since February, when it reached $49,842.
There is a growing number of prospective traders who are more optimistic about the potential for a Bitcoin price increase from its current level of $59,391.
The put-to-call volume ratio, which quantifies the demand for sell versus buy options, is 0.51, with 66.33% of the volume being calls and 33.67% being puts.
On X, the pseudonymous crypto trader Mister Crypto declared that a significant Bitcoin short squeeze is unavoidable.
Thielen clarified that he does not believe the market is “massively short,” but short traders may be “forced to cover” due to “better election odds” for Donald Trump in the coming United States presidential election in November.
He is of the opinion that the market is at a critical juncture, and he is eagerly anticipating the United States Federal Reserve’s decision to reduce interest rates.
He declared, “Such a message could potentially incite a stock market rally, with Bitcoin likely to follow suit.”
