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As Cointelegraph reported on Dec. 12, technical indicators showed BTC was oversold after Bitcoin dropped below $17,600. The 4-hour candle chart saw a bullish divergence and a TD9 buy indicator, signaling that selling pressure was exhausted.
Bitcoin price quickly recovered above $18,000 and continued its run past $18,300. BTC then breaking the whale cluster key resistance level at $18,800 further boosted its momentum. Buoyed by the relief rally, Bitcoin continued to soar, eventually surging to as high as $19,570 across major exchanges.
The futures funding rates across Binance Futures and other major platforms turned negative as Bitcoin began to recover above $18,000. The funding rate of Bitcoin futures contracts turns negative when there are more short-sellers than buyers. This means the likelihood of a short squeeze increases, which could cause buyer demand to suddenly spike. Although the funding rate was negative for a brief time since Bitcoin’s funding rate rarely turns negative, it was indicative of aggressive selling.
A pseudonymous trader known as “Byzantine General” pointed out that short-sellers were highly aggressive throughout the relief rally. A move above $19,300 would squeeze many shorts, he added, saying: “Shorts were really aggressive again and they’re underwater now. Breach through 19300 and they get squeezed hard.”
As soon as Bitcoin surpassed $19,300, it quickly made its way to $19,570, suggesting that a large short squeeze occurred.
Source: FXPro
