The world's largest cryptocurrency, Bitcoin (BTC), has been experiencing an uptick in its market activity despite an increase in short positions on major exchanges like Deribit and Binance. This surge in shorting, a trading strategy where investors bet on a decline in value, began to emerge last week and has resulted in a 4% rise in Bitcoin's price. The current situation has led to speculation about the potential for a short squeeze, which could trigger further price increases.
On-chain data provider Santiment noted that the bearish stance from Bitcoin traders could increase the likelihood of liquidations, driving prices higher. Simultaneously, Bitcoin's active addresses have surged to their highest point in five months, increasing the odds of the BTC price rallying back to its 2023 high of $31,000.
Crypto analyst Ali Martinez pointed out, on social media platform X, that heightened on-chain activity frequently accompanies a bull market. He explained that when the monthly average of new wallets surpasses the annual average, it signifies reinforced network fundamentals and increased usage. Despite static prices, on-chain activity for Bitcoin is rising, hinting at the potential for a bull run resurgence.
Institutional interest in Bitcoin has also been growing over recent months. Top financial entities like BlackRock (NYSE:BLK) and Fidelity have applied for a spot Bitcoin ETF with the US SEC. Additionally, Japanese banking giant Nomura recently unveiled its Laser Digital Bitcoin Adoption Fund to facilitate institutional investors' access to Bitcoin securely and cost-effectively.
However, the market remains volatile and unpredictable. Martinez noted a pattern since mid-April where whenever the RSI hits 73.31 on the 4-hour chart, Bitcoin's price retraces. Currently, BTC is approaching a descending resistance trendline at $27,440. A correction could potentially push Bitcoin down to $25,200 or even lower. However, a 4-hour candlestick closing above $27,440 could signify the resurgence of a bull run.
Despite the Federal Open Market Committee (FOMC) meeting on Wednesday leaving interest rates unchanged in the range of 5.25%-5.50%, the decision had little impact on the Bitcoin price and the broader crypto market.
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