Bitcoin Price Rallies as Short Sellers Get Squeezed Out
The Bitcoin price has seen a significant gain in recent days, surging from $62,821 on August 17 to $72,071 by August 20. This represents an increase of roughly 14% and puts the BTC price close to its 200-day EMA.
The rally is not just limited to Bitcoin, as major altcoins have also responded positively, with many moving into the green zone. However, the biggest driver behind this market movement appears to be the derivatives market, where short sellers were caught leaning too heavily toward another leg lower.
A sizeable short squeeze occurred as the BTC price climbed, resulting in total crypto liquidations reaching $3.30 billion over the latest 24-hour period. This has led to forced buying and a feedback loop of liquidations, pushing prices higher.
The timing of this market movement also coincides with more supportive regulatory developments. On August 19, President Trump hosted crypto executives at the White House and pushed Congress to accelerate passage of the CLARITY Act. The proposed legislation aims to offer clearer crypto jurisdiction, potentially creating a more defined framework for institutional participation.
However, there are still concerns about the technical picture. MACD is showing a widening gap between its line and signal line, while the AO histogram has turned green. Both indicators point toward improving momentum. Nevertheless, RSI is sitting at 79.41, firmly in overheated territory, suggesting the rally may need a breather.
The BTC price now faces a critical test as it approaches its 200-day EMA. A rejection could send the price back toward $60,730, repeating the pattern seen in May when Bitcoin fell from $81,143 to that level after encountering resistance around the same indicator.