Bitcoin Closes Above 50-Week Average, Triggers Buying Frenzy

Bitcoin (BTC) has closed above its 50-week moving average for the first time in 45 weeks, sparking a surge in buying and forcing short liquidations worth $300 million.

The weekly close above the 50-week average is seen as a bullish signal by trend-followers, who have been waiting for this moment to buy. The average closing price over the last 50 weeks is around $78,786, and Bitcoin closed at $81,159 on September 20.

According to Galaxy Research's Alex Thorn, reclaiming the 50-week average historically confirms bear market lows are in, with Bitcoin already up 29% over 35 days.

The short squeeze, triggered by Bitcoin's rise above $84,000, forced traders with short positions to cover their losses, leading to a $300 million buying frenzy within an hour. This surge in buying momentum pushed the price higher, but it eventually fell back as the shorts were cleared and buying momentum stopped.

Bitcoin still needs to close above $85,000 by September 27 for this trend to be solidified, with a drop below $78,786 rendering the September 20 breakout a false signal.