Bitcoin holds off on Santa rally as fund forecasts a new year ‘short squeeze’
Bitcoin (BTC) stayed rangebound after hitting ten-day highs on Dec. 22 amid fresh warnings over market “complacency.”
How about a new year squeeze?
Bulls were up against a significant sell wall around the psychologically significant level, with analysts calling for $50,500 to hit and hold in order to flip positive on short timeframes.
“Today the seas will be parted making way for a shot at a higher low on BTC,” popular trader Pentoshi tweeted in a characteristic social media post.
“I beg of bears, please. Come on the Ark. Come to safety. Ride with us to the dry lands of 53k where all can win and embrace in glory.”
While the “Santa rally” has so far evaded both crypto and traditional markets, looking ahead, some were betting on a turnaround over the new year period.
For trading firm QCP Capital, the key lay in forthcoming low liquidity over the holidays which could spark a short squeeze in an overly nonchalant market setup.
“We reckon the market is getting complacent as spot ranges compress in this 45,500 – 49,500 channel. And now would be a great time to buy some wings (far strikes),” it advised Wednesday.
“…We maintain our view that there will be a squeeze (likely to the topside) as liquidity thins out into the holidays and into 2022. If this happens, owning wings would be very profitable.”
Funding rates on exchanges were positive yet neutral across exchanges at the time of writing, data from Coinglass showed, hinting at a lack of speculative activity.
Dollar abandons fresh gains
Macro cues remained muted at the Wall Street open, meanwhile, as a 4.3% jump in Tesla (TSLA) stock failed to impact Bitcoin performance.
The S&P 500 was slightly up after the opening bell, while the Coronavirus panic which had characterized the previous week appeared to subside.
Further relief came in the form of a declining U.S. dollar, with the U.S. dollar currency index (DXY) heading towards 96 support throughout the day.