Bitcoin Breakout Faces Crucial Test at 200-Day EMA

Bitcoin's recent breakout has reached a critical juncture as it faces its first major test at the 200-Day Exponential Moving Average (EMA) of $71,711. The cryptocurrency broke through the $70,000 level for the first time since June 2 and has been rising rapidly, fueled by a massive short squeeze.

The price surge was driven by the forced liquidation of over $2.7 billion in Bitcoin shorts across two sessions, with more than $1 billion of those being wiped out in a single hour on Wednesday. This is the largest short-side flush recorded since tracking began in 2021 and accounts for most of the buying that produced this candle.

The short squeeze has reset market positioning hard, with the Fear and Greed reading rising from 40 to 62 in just two days, indicating a significant shift towards greed. However, it's essential to note that forced covering is not accumulation, and the chart shows almost no consolidation shelf built on the way up.

The $2.7 billion liquidation has now been spent, and any further advance will have to be paid for with real spot demand rather than forced buybacks. The 200-Day EMA remains a crucial level, as it decides everything about this rally.