Friday’s Crypto-Market Breakout Caused Massive Short Covering, May Be Technically Significant: FSInsight
Technical breakouts made by some cryptocurrencies led to “massive short covering,” the firm said in a report.
Notable technical breakouts made by some cryptocurrencies on Friday led to “massive short covering and futures short liquidations at the highest level in over a month,” according to a report by FSInsight, a markets strategy and research firm.
Bitcoin, solana, ether, litecoin and XRP all advanced more than 8% in the early hours of Oct. 1, gains that looked to be technically positive as prices rose above the weekly highs in addition to one-month downtrends, FSInsight said.
Short covering occurs when investors who are positioned short – that is they’ve sold assets betting on further declines – are forced to cover their bearish bets by buying in the market as prices rise, leading to further gains.
Momentum remains positive on weekly charts and has also turned to positive on daily charts following Friday’s move higher. Bitcoin has “resolved its 10-day sideways range by exceeding the downtrend which had been in place since early September,” according to the report.
It is possible that bitcoin is starting off its “traditionally bullish 4Q seasonal rally,” FSInsight said. The firm’s first upside target is $52,956 – the September high – followed by $64,895. Momentum may be overbought on an hourly basis but “dips are likely buyable” daily momentum is not overbought, FSInsight said.
Bitcoin was trading lower about $47,500 as of publication time.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.