Bitcoin (BTC) Price Prediction: Bulls and Bears Battle It Out, Which Side Will Win?

Bitcoin [BTC], the largest cryptocurrency by market cap, has recently experienced a moderate recovery in its price charts.

Bitcoin [BTC] price action has shown some moderate recovery in the last 24 hours. At press time, BTC was trading at $57,110 after a 4.27% gain.

This increase was noted despite BTC being on a strong downward trajectory, dropping by 6.54% over the last 30 days. Therefore, despite the recent gains, BTC remained relatively low from its recent high of $65,103 and 22.8% from its ATH.

However, the recent price hike seemed to have left traders in a pickle. This was because BTC short positions have piled up over the last few days.

According to data from Coinglass, the total short positions on major exchanges have amounted to $630 million in the last 24 hours. In fact, short positions have also seen a 146.7% increase since Saturday evening.

Usually, traders bet on an asset’s price to decrease by shorting it. In the traditional sense, shorting an asset involves borrowing it and selling it, with the intention of buying it again at a lower price.

Later on, the trader will return the borrowed asset and keep the difference between the two prices. However, in the crypto market, shorting an asset can be done via perpetual futures contracts or options.

In this case, traders can short an asset by opening a short futures position or buying a put option. Later on, they will close the position or sell the option at a higher price.

If the price does decrease, the trader will make a profit. However, if the price increases, the trader will incur a loss.

Now, coming back to the BTC short positions, the large buildup indicated that many traders expected the price of BTC to decrease.

This market sentiment is usually driven by FUD, as investors lack confidence in the price direction and expect a pullback. However, if the price fails to decline as short sellers expect and rises, they come under pressure.

These investors are then forced to buy back the assets they borrowed to cover their positions, especially when there’s a risk of higher losses. As noted by the last 24 hours gains, this price increase has resulted in the increased liquidation of short positions, suggesting market volatility.

These forced purchases result in higher demand, which drives prices up, resulting in a short squeeze.

Bitcoin’s price charts showed signs of life on Monday morning as the cryptocurrency’s price rose once again. However, the market is experiencing higher uncertainty, resulting in increased volatility.

Usually, September is historically associated with volatility, with this year’s BTC’s 30-day volatility spiking by 70%.

Thus, indicators such as Implied Volatility have increased since September started after a drop in August. In particular, short-term options have surged by 60% from 52%.

Additionally, the upcoming U.S. presidential elections are contributing to current market uncertainty. This FUD is further supported by a sudden rise in Long Term Holder SOPR from 1.4 to 2.0.

So, although prices are in rising, they may experience a pullback this sell to close the realized gains.

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